Chapter 7 – Presumption of Abuse 

Posted: 1:00 am Mon, April 26, 2010
By admin
Tags: Chapter 7

Where the trustee moved to dismiss the debtors’ Ch. 7 petition based on the presumption of abuse, the Bankruptcy Court rejects the debtors’ three special circumstance arguments and grants the trustee’s motion because (1) there is no legitimacy to the hypothetical Ch. 13 administrative expenses that the debtors have scheduled, and simply by eliminating that expense, the debtors’ income and expenses indicate a surplus of $484, more than double the $182.50 necessary to rise to a presumption of abuse, (2) the debtors allege an additional $200 monthly automobile expense based on their ownership of four vehicles but National and Local Standards permit a deduction of $374 for two or more vehicles and the debtors have not show that four cars in a household of four people is a necessary or actual expense, and (3) the debtors’ $158 in monthly income attributable to the pre-petition sale of certain savings bonds does not rise above “the extremely high special circumstances bar,” and the amount is not dispositive in any event because a reduction of the debtors’ income by $158 still leaves a surplus in excess of $182.50.