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20
May
2021

Chapter 7 Dismissed – Substantial Abuse

Here, the court dismissed the debtor’s Chapter 7 bankruptcy even though the debts were entirely consumer in nature.

Here, the court found that the debtor had the financial ability to repay most of his obligations and could have filed a Chapter 13 plan of reorganization.

Although Congress did not define what “substantial abuse” meant when finding that a Chapter 7 case may be dismissed for this abuse, the primary factor to be considered in determining whether “substantial abuse” will occur is whether the debtor has the ability to repay the debts for which a discharge is sought.

Substantial abuse will occur if a debtor who has the ability to repay all or a substantial portion of the scheduled debts under a Chapter 13 plan.

The court found that the debtor’s monthly expenses were excessive insofar as the monthly budget included $722.00 for rent, $58.00 for cable television and $166.00 for dining out, hair cuts and gifts.

The court found that these expenses were excessive in light of the of the fact the debtor owed more than $76,000.00 to unsecured creditors. The court ordered the case dismissed, or converted to a Chapter 13 repayment plan. U.S. Trustee vs. Dennis Clark, 136 B.R. 122.

Author: Charles R. Harroun, Attorney at Law



This entry was posted on Thursday, May 20th, 2021 at 9:05 am and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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