669 B.R. 566
Bankr. N.D. Fla.2025Background
- Amanda Schwendt filed a Chapter 7 bankruptcy petition on October 14, 2024, claiming negative monthly disposable income and stating no funds would be available for unsecured creditors.
- Shortly before filing, Schwendt received a job offer with a high hourly wage ($60/hour), starting two days after the petition was filed.
- Her schedules did not reflect the imminent increase in income, nor did they accurately report the surrender of a vehicle and related expense reductions.
- The U.S. Trustee moved to dismiss the case under 11 U.S.C. § 707(b)(1) and (b)(3), arguing that the totality of the circumstances showed Schwendt could repay her creditors in a Chapter 13 plan.
- Schwendt argued that her job was not guaranteed and that hardships, including her spouse's disability and her prior unemployment, justified Chapter 7 relief.
- The bankruptcy court found Schwendt’s income and ability to pay under Chapter 13 outweighed other factors and granted the motion to dismiss unless Schwendt converted to Chapter 13 within 14 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Abuse of Chapter 7 under 707(b)(1) & (b)(3) | Schwendt can repay creditors in Chapter 13; Chapter 7 is abusive. | Schwendt's job is insecure; past hardships justify 7. | Allowing Chapter 7 would be abusive; motion to dismiss GRANTED. |
| Weight of post-petition income in abuse test | Post-petition ability to pay is relevant to totality test. | Job security uncertain; hardships outweigh income. | Post-petition income is properly considered; dismissal GRANTED. |
| Credibility and accuracy of schedules/testimony | Schedules understate income and overstate expenses. | Inaccuracies not material; no intent to mislead. | Inaccuracies significant; undercut credibility. |
| Effect of other mitigating circumstances | Income/ability to pay primary consideration. | Non-guaranteed job/spousal disability are mitigating. | No factors outweigh ability to pay; motion to dismiss GRANTED. |
Key Cases Cited
- In re Green, 934 F.2d 568 (4th Cir. 1991) (the core inquiry under § 707(b) is debtor’s ability to pay unsecured debts).
- In re Henebury, 361 B.R. 595 (Bankr. S.D. Fla. 2007) (dismissal proper when debtor began earning substantial income days after filing).
- Witcher v. Early (In re Witcher), 702 F.3d 619 (11th Cir. 2012) (BAPCPA lowered the standard for § 707(b) dismissal from "substantial abuse" to "abuse").
- In re Lamug, 403 B.R. 47 (Bankr. N.D. Cal. 2009) (post-petition disposable income sufficient to support a finding of abuse).