Legal News for Credit Union Managers Since 1990
« Cram Down – Chapter 13 Valuation
Garnishment Protection Lifted At Deposit »
03
Dec
2010

Substantial Abuse – Bankrutpcy Dismissed

In this case, debtor filed a Chapter 7 bankruptcy seeking to discharge his unsecured obligations. The debtor listed over $55,000 of unsecured debts on his bankruptcy schedules, including a $9,500 loan from a credit union.

The bankruptcy Trustee reviewed debtor’s monthly budget and found that debtor could afford to repay some of his obligations (such as through a Chapter 13 repayment plan). The Trustee filed a motion to dismiss debtor’s bankruptcy, and debtor thereafter amended his budget to include another large credit union debt of some $6,700.

The amended schedules also indicated that debtor expended some $250 per month for recreation and $300 per month for food. Debtor testified the entertain- ment expense was spent because the debtor frequents a lot of night clubs and bars.

The court found that:

. . . debtor’s proposed budget allocated excessive amounts to entertainment, and too much for food (50% more than the average consumer expenditure reported by the U.S. Bureau of Census). Debtor’s failure to originally file accurate schedules with the court resulted in the court finding that the debtor did not file a “good faith bankruptcy”.

Debtor’s Chapter 7 case was not converted to a Chapter 13 repayment plan, rather the court dismissed debtor’s case, finding that it constituted a substantial abuse of the bankruptcy system. In re Thomas Smurthwaite, 149 B.R. 409.

Author: Charles R. Harroun



This entry was posted on Friday, December 3rd, 2010 at 4:33 am and is filed under Bankruptcy, National. 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.

Leave a Reply

Your comment

Powered by WP Hashcash

  • Recently Posted Articles written by: Charels R. Harroun, Attorney at Law

    • Incompetency Defense in Collection Suit
    • Protecting Home Equity Mortgage Portfolios
    • Defective Automobile Lien Enforced
    • Preferential Transfer: Creditor Retains Debtor Garnishment Funds Received within 90-Days of Bankruptcy Filing
    • Refinanced Debt Fraud – No New Money
    • Collateral Taken Out-of-State
    • Chapter 13 Plan Cures Arrearage
    • Fraudulent Check Endorsement by Borrower
    • Creditor Required to Release Lien
    • Collection Letter Not Required Before Filing Suit
    • Insurance Lapse: Lift Stay & Repossess Collateral

  • Website Builder

2009-2020 Copyright Harroun, P.C. | Credit Union Legal Newsletter powered by WordPress and Uchilla
Subscribe: Entries (RSS) and Comments (RSS)