650 F.3d 338
4th Cir.2011Background
- Calhouns filed a voluntary Chapter 7 petition on February 27, 2008 seeking discharge of about $106,707 in unsecured debt.
- Mr. Calhoun's income from pensions totals $7,313 monthly; Social Security adds $1,459; combined monthly income is $8,772; Mrs. Calhoun has no independent income.
- They reside on 3.5 acres in Jackson, South Carolina, with no dependents, and they previously attempted to sell their home and renovated it at substantial cost.
- Mr. Calhoun's retirement funds were converted to an IRA; downturn reduced these funds; they incurred debt including a second mortgage and five credit cards.
- They paid $2,638 monthly under a credit-management plan for 22 months before filing for Chapter 7, but found this insufficient for emergencies.
- Under § 707(b), the court considered whether the petition shows abuse, applying the means test and, if necessary, the totality of the circumstances.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 707(b)(3) totality supports abuse dismissal | Calhouns contend Green controls and precludes dismissal on ability to pay. | Trustee argues totality shows abuse despite means-test result. | Abuse established under totality; dismissal affirmed. |
| Whether Social Security benefits are includable in the ability-to-pay analysis | Calhouns contend SS benefits should be excluded from income for means test. | Court may consider SS benefits in totality; not dispositive to exemption. | Court did not rely on exclusion of SS in outcome; abuse shown regardless. |
| Whether the means test presumption of abuse governs the result | Means test showed no presumption of abuse, thus relief should be granted. | Presumption may not be conclusive; totality may still show abuse. | Presumption not controlling; totality supports abuse. |
| Whether Green remains applicable or overridden by BAPCPA in this context | Green governs totality; its applicability remains intact. | BAPCPA amended § 707(b), diminishing Green's relevance. | Court relied on totality factors consistent with Green, as applied under § 707(b)(3). |
Key Cases Cited
- Green v. Staples (In re Green), 934 F.2d 568 (4th Cir.1991) (adopted totality-of-the-circumstances approach in abuse analysis)
- In re Se. Hotel Props. Ltd., 99 F.3d 151 (4th Cir.1996) (review of bankruptcy appellate decisions is plenary; standard of review)
- Morse v. Rudler (In re Rudler), 576 F.3d 37 (1st Cir.2009) (means test purpose is to distinguish repayers from non-repayers)
- Ross-Tousey v. Neary (In re Ross-Tousey), 549 F.3d 1148 (7th Cir.2008) (means test framework and abuse considerations)