This case came on for hearing before the court on January 13, 1997 on the motion of the debtor for a stay pending appeal from the order of the court entered herein November 1, 1996 granting Commercial Credit Corporation relief from stay thereby permitting said creditor to proceed with its action in the Fayette Circuit Court, Civil Action No. 96-CI-0796, to foreclose its mortgage on the debtor's residence at 1543 Montrose Drive, Lexington, Fayette County, Kentucky.

As best the court can discern from the record in this case and the record in the case of Kimberly Michelle Byars, the daughter of the debtor, the debtor and her daughter acquired the property from the debtor's mother by deed dated November 12, 1994, recorded November 14, 1994, in Deed book 1760, Page 46, in the Fayette County Court Clerk's office.

At the time the debtor and her daughter were deeded the property it was subject to a purchase money mortgage in favor of PNC Bank. The balance due on this mortgage is $20,612.16. See paragraph 7 of the Default Judgment and Order of Sale of the Fayette Circuit Court attached as an exhibit to the motion for relief from stay. Shortly after the debtor and her daughter acquired the property the debtor borrowed $12,397.95 from Commercial Credit Corporation. She and her daughter executed a mortgage on the property to secure payment of the mortgage note. Because of nonpayment the balance due on this mortgage has increased to $17,371.36, which includes an arrearage of $6,215.38. The court cannot discern the balance due the third mortgage of Norwest Financial, Ky., Inc. This creditor did not file an answer in the foreclosure action. The schedules to the petition list the amount of this indebtedness as $2,700. In any event, the indebtedness on the property appears to approximate the value of the property.

The debtor lost social security income when her daughter reached age 18 in 1994 and thereafter has not been able to maintain regular payments on the mortgages on the residence. The debtor has made no payments on the principal indebtedness on the mortgage of Commercial Credit corporation since May of 1995. She made an interest payment in June of 1995.

The foreclosure action of Commercial Credit Corporation was first delayed when the debtor's daughter, Kimberly Michelle Byars, filed a pro se petition for relief under chapter 13 of the Bankruptcy Code on February 13, 1996, Case No. 96-50252. The daughter listed her address as 3716 Trent Circle, #1207, Lexington, Kentucky, indicating she no longer lived at the 1543 Montrose Drive address. Although the schedules to the daughter's petition indicated she was employed and was entitled to receive $150 per month in child support, she did not pay the filing fee and paid only $87.50 to the chapter 13 trustee.

Approximately one month after commencement of the daughter's case, the debtor herein filed a pro se chapter 13 petition on March 12, 1996, Case No. 96-50481. She did not pay the filing fee.

Both of these pro se cases were dismissed on August 9, 1996 for nonpayment of the filing fee. The mother made no payments to the chapter 13 trustee during the six-month period while her case was in progress, and as previously indicated the daughter made payments totaling only $87.50 during the seven months her case was in progress.

The mother filed the present case with the assistance of counsel on October 25, 1996.

The mother/daughter co-owners of the residence at 1543 Montrose Drive have used chapter 13 to forestall state court foreclosure action since February of 1996, or for nearly one year. Prior thereto they had made no payments on the principal of the mortgage since May of 1995. Thus the mortgage payments are 19 to 20 months in arrears.

The daughter co-owner no longer lives at that address and does not appear to be prepared to assist in payment of the mortgages on the premises. Bank One has repossessed the automobiles of both the mother and daughter.

The budget of the debtor in this case is inconsistent with the debtor's original plan. The debtor's budget (Schedules I and J to the petition) shows disposable income of only $201.44 per month whereas the original plan provided for payments to the trustee of $354 per month. Obviously the debtor could not make these payments to the trustee based on the original budget.

On November 1, 1996 the debtor filed amended Schedules I and J and an amended plan providing for payments of $223.16 per month to the chapter 13 trustee for a period of 60 months. The amended Schedule I shows an increase of $400 per month in the debtor's net monthly income, although there appears to be no increase in the deductions from her wages. The source of this increase in income is not explained. Schedule J shows an increase in expenses of $271 per month by increasing the monthly home mortgage payments to creditors from $291.35 to $562.35 per month. The amended Schedules I and J and amended plan were filed concurrently with the debtor's motion to reconsider the order granting Commercial Credit Corporation relief from stay to proceed with the foreclosure action.

The court overruled the motion to reconsider by order entered on November 4, 1996. This ruling was based on the fact that there was no information in the amended Schedules I and J, or the amended plan, explaining the purported increase in the debtor's income or how the debtor might fund the amended plan. The mere filing of the amended budget and plan did not address the fact the debtor and her daughter did not pay the fees for filing their previous chapter 13 cases and made no significant payments to the chapter 13 trustee after filing those cases, or the fact the debtor had made no payments to the chapter 13 trustee since the commencement of this case.



As noted by the court in its order of November 4, 1996, a motion to reconsider the order of November 1, 1996 granting relief from stay did not operate as a stay of the order. Rule 7062, Federal Rules of Bankruptcy Procedure.

The only way to obtain a stay of an order granting relief from stay is to file a timely appeal and to seek a stay of the order pending appeal.

On the facts of this case the court declined to grant a stay pending appeal. From the perspective of the court it appears the debtor and her daughter have merely used chapter 13 to delay foreclosure on their property without any ability or intent on their part to formulate feasible plans for curing the arrearage on the mortgage of Commercial Credit Corporation or repayment of their debts.

However, the parties have submitted a proposed agreed order sustaining the motion of the debtor for a stay pending appeal. The order contains so-called "drop dead" provisions terminating the stay and providing for dismissal of the appeal in the event the debtor defaults on her payments to Commercial Credit Corporation as specified in the agreed order during the appeal.

The court has reservations about the agreed order because it makes no reference to the debtor's obligation to maintain payments to other mortgage holders or to the chapter 13 trustee during the pendency of the appeal. The court hereby imposes the requirement that the debtor maintain the $223.16 per month plan payments to the chapter 13 trustee and the payments to the first and third mortgage holders during the pendency of the appeal, otherwise this case shall be dismissed.


By the court -





Copies to:


Gerry L. Harris, Esq.

Michael R. Gosnell, Esq.

Sidney N. White, Esq.

U.S. Trustee