607 B.R. 833
Bankr. E.D. Va.2019Background
- Debtor Delia Ann Dowd (54) filed a Chapter 7 petition on April 22, 2019; primarily consumer debts.
- Prior full‑time social‑work salary $89,000; later employed part‑time with City of Alexandria (~$43,000) plus retail job; 2018 gross income $63,000.
- Schedules listed a 2016 Nissan Murano (value $19,000; lien $23,134) and intent to retain and redeem it.
- Means Test (Form 122A‑2) showed above‑median debtor with $286.87 monthly disposable income (presumption of abuse under 11 U.S.C. § 707(b)(2)). Debtor answered “No” to special circumstances.
- After filing (about three months later), Debtor traded the Murano and bought a used vehicle for $19,900 with a 26% interest rate and a $526/month payment.
- U.S. Trustee moved to dismiss for abuse under § 707(b)(2) and (b)(3); court granted dismissal under § 707(b)(2) and dismissed the case without prejudice.
Issues
| Issue | Plaintiff's Argument (U.S. Trustee) | Defendant's Argument (Dowd) | Held |
|---|---|---|---|
| Whether a presumption of abuse arises under § 707(b)(2) | Means Test shows disposable income → presumption of abuse | Means Test should be re‑evaluated given post‑petition circumstances | Presumption arises; Debtor did not rebut it |
| Whether post‑petition purchase of a vehicle can alter the § 707(b)(2) means test / constitute a "special circumstance" | Post‑petition ordinary changes (e.g., car purchase) cannot be used to recalculate means test; special circumstances must be severe | Post‑petition purchase and safety concerns justify recalculation and rebut presumption | Post‑petition ordinary changes are not considered for § 707(b)(2); Debtor’s purchase is not a qualifying special circumstance; dismissal granted |
Key Cases Cited
- Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) (means‑test expense deductions interpreted narrowly)
- Hamilton v. Lanning, 560 U.S. 505 (2010) (courts may account for income changes that are known or virtually certain)
- In re Quigley, 673 F.3d 269 (4th Cir. 2012) (debtors may not deduct secured payments for collateral they intend to surrender)
- Calhoun v. U.S. Trustee, 650 F.3d 338 (4th Cir. 2011) (means test presumption rebuttable; court may still find abuse under totality of circumstances)