Chapter 7 Debtor Beat U.S. Trustee’s Motion to Dismiss where UST failed to show Debtor’s Filing was an Abuse under the Totality of the Circumstances

Chapter 7 Debtor Beat U.S. Trustee’s Motion to Dismiss where UST failed to show Debtor’s Filing was an Abuse under the Totality of the Circumstances

The United States Trustee asserts that the totality of Debtor’s financial circumstances demonstrates abuse of the provisions of chapter 7 of the Bankruptcy Code under section 707(b)(3)(B). On this basis, the United States Trustee moves this Court to dismiss Debtor’s case pursuant to section 707(b)(1).

On September 22, 2016, Debtor filed a petition under chapter 7 of the Bankruptcy Code. He owns a house which is security for two mortgages. His wife (who is not a joint debtor in this case) owns a house which secures one mortgage. Debtor primarily lives in the house owned by his wife. In this bankruptcy, Debtor claims expenses for his house but also claims expenses for his wife’s house. It is this circumstance (expenses for two houses for one family) that is the source of the quarrel.

The United States Trustee moves to dismiss this case under section 707(b) of the Bankruptcy Code. Section 707(b) provides, in relevant part, that

(1) After notice and a hearing, the court . . . on a motion by the United States trustee . . . may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter.

11 U.S.C. § 707(b)(1). The parties agree that Debtor’s debts are primarily consumer debts. The United States Trustee timely filed this motion to dismiss alleging that the granting of a discharge would be an abuse of chapter 7.

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