Debtor filed a Chapter 7 petition in September 2017. Three months later, Jean Whittle filed a motion requesting that the court dismiss the petition for cause, under 11 U.S.C. § 707(a). She also filed a complaint, under 11 U.S.C. § 523(a)(6), objecting to the discharge of a debt owed to her by Debtor. As Ms. Whittle sees things, the Chapter 7 case was filed in bad faith because it was filed solely to discharge Debtor from liability arising out of a serious car crash, caused by Debtor’s carelessness. Ms. Whittle has not recovered a penny during the nearly 15 years since she suffered severe injuries in the car crash, because Debtor had no automobile liability insurance. Ms. Whittle holds a money judgment against Debtor for over $700,000. Practically speaking, there are no other creditors with claims in the bankruptcy case.
This appears to be a no-asset case.
Over 13 years ago, Debtor was driving a Ford truck on East Avenue, near its intersection with Elmwood Avenue. The area is a busy one, where drivers do well to keep their wits about them. Debtor knew that she had no automobile liability insurance, having had her policy cancelled just days earlier. As she zipped along, Debtor and her passenger enjoyed a lively conversation, looking toward each other and laughing. Unfortunately for Jean Whittle, Debtor was distracted to the point that she never saw the red light at the intersection of East Avenue and Aliens Creek Road. And she never saw Ms. Whittle’s Chevy turning left on to East Avenue—legally, with the green light giving Ms. Whittle the right of way. Debtor’s vehicle torpedoed Ms. Whittle’s car broadside, trapping Ms. Whittle until the Fire Department could cut her free from the wreckage. The crash, resulting from Debtor’s carelessness, was horrific. The injuries to Ms. Whittle were severe, requiring a lengthy hospital stay. Ms. Whittle lost her job because of the extended absence necessitated by her injuries. Debtor walked away with a few scratches and a couple traffic tickets.
Debtor defaulted in answering in an action brought by Ms. Whittle in state court. Based on medical records and an affidavit of Ms. Whittle, the state court entered a judgment in favor of Ms. Whittle and against Debtor in the amount of $350,000 in January 2006. The judgment, with accrued interest, now stands at over $700,000. Debtor has not paid a penny to Ms. Whittle. According to the petition, Debtor owns no real property and no personal property of any value. Debtor and her family live in a house that was purchased in July 2014—but the deed granted title only to someone other than Debtor. She is not employed. Other than the claim held by Ms. Whittle, there are almost no other unsecured creditors with claims in the bankruptcy. It is not disputed that the bankruptcy petition was filed for the sole purpose of discharging Debtor from liability on the judgment held by Ms. Whittle.
The issue is whether this Chapter 7 petition be dismissed for cause, under 11 U.S.C. § 707(a), solely because Debtor is attempting to discharge her liability to Ms. Whittle—a creditor holding a sizeable judgment arising out of a horrific motor vehicle accident caused by Debtor admitted carelessness, made worse by Debtor’s failure to have a statutorily mandated automobile liability insurance policy in place at the time of the wreck? On these facts, the answer is no.
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