Opinion
NOT FOR PUBLICATION
MEMORANDUM DECISION DENYING UNITED STATES TRUSTEE'S MOTION TO DISMISS CASE
James W. Meyers, Judge United States Bankruptcy Court
The U.S. Trustee's Motion to Dismiss Case ("Motion") was heard on February 8, 2008. Based on the pleadings submitted, the arguments presented at the hearing and a review of the totality of the circumstances of the Debtors' financial situation, the Court finds that granting a discharge in this case would not constitute an abuse under 11 U.S.C. § 707(b)(3)(B).
This decision would have been simplified if the Debtors' Opposition to the Motion had included updated versions of Schedules I and J, and Form 22A, to reflect their actual projected income and expenses rather than a brief declaration referencing various categories and a vague statement that "some of our expenses have changed." Despite the lack of an exhibit reflecting all the changes to the Debtors' projected income and expenses since the petition was filed, a review of the Debtors' overall circumstances leads to the conclusion that this is not the type of situation the Congress was envisioning as an abuse in enacting §707 (b) (3) (B) . The U.S. Trustee's position is based solely on the Debtors' potential ability to fund a Chapter 13 plan. There is no allegation of bad faith. Based on the analysis provided in the Declaration of Randall Horton, the U.S. Trustee concludes that the Debtors have monthly "disposable income" of $652.25, which would result in the ability to pay 41.82% of their total unsecured claims.
The Debtors' Schedule I puts Mr. Benders' monthly gross income at $6962.80. Mrs. Bender is no longer working due to a stress related disability. The Debtors have four children, ranging in age from 4 to 22. The oldest attends college. The youngest was adopted through the County, and has developmental problems caused by exposure to drugs prior to birth. The Debtors receive $631 per month in government assistance to help support the adopted child. While that payment may not be excepted from the income categories used to prepare Form 22A, it does appear to be in the nature of the parenthetical exceptions to the definition of "disposable income" found in §1325(b)(2). The adoption payment of $631 per month is almost the full amount the U.S. Trustee uses as the basis to fund a plan in a Chapter 13, and yet would likely not be included as part of the "disposable income" under §1325(b) (2) .
The U.S. Trustee's Reply points to areas in which the Debtors were given the benefit of the doubt in the calculations provided by Mr. Horton. However, due to inconsistencies between the Debtors' Form 22A, Schedules I and J, and their Declaration, there are several expense categories that appear understated in Mr. Horton's analysis. For example, there is no provision for health care or telecommunication expenses in the Forms 22A prepared by Mr. Horton or the Debtors, but Schedule J contains amounts of $125 and $250 for those line items. The Forms 22A have no entry on lines 2 9 or 38, although the Debtors' declaration refers to the extra cost for expenses relating to their developmentally challenged child, and for their teenagers.
There are other facts which support a finding that this case is not an abuse of the provisions of Chapter 7. There is no indication of manipulation, extravagance or bad faith on the part of these Debtors. Doctors found a tumor on Mr. Bender's heart about a year before this case was filed, and he had extensive surgery. They lost their home to foreclosure. The schedules show they own a 1995 Saturn and a 1996 Chevrolet Suburban, each with over 130,000 miles. Since there are no liens on the vehicles, there is no provision for car payments in Mr. Horton's analysis. There is no evidence that they have any assets of a value above their allowed exemptions.
After reviewing all the circumstances of the Debtors' financial situation, the Court finds that granting relief to the Debtors would NOT be an abuse of the provisions of Chapter 7. The Court will enter a separate order this same date.