2015 WL 6560608
Bankr. D. Colo.2015Background
- Debtors Eugene Duane Burgher and Theresa Lynn Burgher filed Chapter 13, later converting to Chapter 7 on August 11, 2014.
- UST moved to dismiss under 11 U.S.C. §707(b)(1) with a presumption of abuse under §707(b)(2) or a finding of abuse under §707(b)(3).
- Debtors argue §707(b) does not apply to cases converted to Chapter 7; they concede dismissal if §707(b) applies to converted cases.
- Court identifies three approaches (majority, minority, hybrid) on whether §707(b) applies to converted cases and adopts the majority approach.
- Debtors did not file updated Chapter 7 schedules or Form 22A in the Chapter 7 case; Form 22C from Chapter 13 is used for analysis.
- Court concludes 707(b) applies to converted cases and grants the UST’s motion to dismiss under §707(b)(1) based on presumption and abusive totality of circumstances.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §707(b) apply toChapter 7 cases converted from Chapter 13? | DuBois/UST: §707(b) should apply to converted cases. | Burghers: §707(b) does not apply to converted cases. | Yes; §707(b) applies to converted cases. |
| Is there a presumption of abuse under §707(b)(2) for the Debtors? | UST alleges disposable income exceeds means test threshold. | Debtors concede if applicable, they would be subject to dismissal. | Presumption of abuse exists under §707(b)(2) for these Debtors. |
| Does the totality of circumstances support abuse under §707(b)(3)? | UST asserts abuse based on timing and lack of good faith. | Debtors argue for conversion conformity and lack of good faith not shown. | Court finds abuse under §707(b)(3); supports dismissal. |
Key Cases Cited
- Marrama v. Citizens Bank, 549 U.S. 365 (U.S. 2007) (conversion eligibility requirement for relief in new chapter)
- Ransom v. FIA Card Services, N.A., 562 U.S. 61 (U.S. 2011) (conversion framework; cites bankruptcy provisions on dismissal)
- In re Kellett, 379 B.R. 332 (Bankr. D. Or. 2007) (supports applying §707(b) to converted cases)
- In re Perfetto, 361 B.R. 27 (Bankr. D.R.I. 2007) (discusses §707(b) applicability in converted cases)
- In re Davis, 489 B.R. 478 (Bankr. S.D. Ga. 2013) (supports majority view on §707(b) in converted cases)
- In re Layton, 480 B.R. 392 (Bankr. M.D. Fla. 2012) (illustrates concerns about literalist readings of §707(b))