Debtor Failed Means Test Where he Could Not Justify Excess Rent Payment and Overstated his Truck Payment

Debtor Failed Means Test Where he Could Not Justify Excess Rent Payment and Overstated his Truck Payment

The Debtor filed his voluntary petition under Chapter 7 on January 6, 2017. On his petition, he acknowledged that his debts were primarily consumer debts, and, on his Schedule E/F, he listed over $105,000 in non-priority, unsecured debt. On his Schedule I, the Debtor disclosed that he was employed by the State of Illinois, had gross earnings of $4954 per month, and, after mandatory deductions, took home $3216 per month. The Debtor’s Schedule J identified $6611 in monthly expenditures, including over $2000 in monthly credit card and unsecured debt payments expected to be discharged through this case.

The Debtor filed his Chapter 7 Statement of Your Current Monthly Income—Official Form 122A-1, wherein he disclosed that his income had averaged $4916.47 per month during the six-month period preceding his filing. He acknowledged that his annualized income of $58,997.64 exceeded the Illinois median income for a household of one person. Because he was “over the median,” the Debtor then completed a Chapter 7 Means Test Calculation—Official Form 122A-2. On his Form 122A-2, he listed what he claimed were his allowable expenses, calculated his projected disposable income to be only $8.32 per month, and checked the box asserting that his means test calculation resulted in no presumption of abuse.

The United States Trustee (“UST”) timely filed a statement of presumed abuse and her Motion to Dismiss. In the Motion to Dismiss, the UST asserted that, although the Debtor correctly calculated his income on his means test form, he claimed improper or unavailable deductions for some of his expenses.

Specifically, the UST objected to the Debtor’s claimed deductions of $539 for rent in excess of the allowable standard for housing, $46 per month for unsubstantiated additional health care expenses, $30 in extra telecommunications expenses, and $250 in unsupported charitable contributions. The UST alleged that, if the objected to deductions were disallowed, the Debtor would be able to pay a significant dividend to his unsecured creditors, and therefore his filing was an abuse of Chapter 7. The UST also argued in the Motion to Dismiss that the Debtor’s lease of a home for $1800 per month and certain of his other expenditures, including his voluntary retirement contributions, demonstrated abuse under a totality of the circumstances analysis.

The Debtor responded to the Motion to Dismiss by asserting that the additional $539 he claimed for his rental expense was an actual expenditure and was justified by the special educational needs of his ex-fiancée’s daughter, which could only be met by renting a home in the Chatham School District. He also claimed that he had provided documentation to support the other questioned deductions and that he would continue to provide additional documentation to justify those deductions. He requested an evidentiary hearing be scheduled to allow him to testify as to his good faith in filing his petition under Chapter 7.

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