Here, Debtors’ Bankruptcy was Dismissed for Substantial Abuse by the Debtors.

In this case, the Chapter 7 bankrupts filed their estimated monthly budget with the bankruptcy court, which included a $350 contribution to their church.

The court found that such a large monthly contribution by the debtors to their church each month constituted an abuse of the provisions of the Bankruptcy Code. The relief provided by bankruptcy is intended for those who, in good faith, cannot afford to repay their obligations.

The court further found that if debtors revised their budget by reducing their monthly expenditures for other items as well, debtors could afford to repay approximately one-half of their unsecured debts over a thirty-six month period and nearly 80% of their unsecured debts over sixty months.

Hence, the court found that these debtors were not eligible for relief under Chapter 7 of the Bankruptcy Code and dismissed debtors’ case in its entirety. In re Lee, 162 B.R. 31.

EDITOR’S COMMENT

The Bankruptcy Code does tolerate, to some extent, some charitable contributions by debtors.

Author: Charles R. Harroun, Attorney at Law