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