502 B.R. 553
Bankr. N.D. Ill.2013Background
- Debtors filed for Chapter 7 relief; UST and FirstMerit moved to dismiss as abuse under §707(b).
- Movants contend debt structure is primarily consumer debt and a §707(b)(2) presumption applies.
- Debtors contend they do not have primarily consumer debt and §707(b) does not apply.
- Court previously ruled orally on Nov. 14, 2013 that Debtors have primarily consumer debts; briefing on presumption of abuse was waived by Debtors.
- Undisputed facts: Elmwood Park Property mortgage to CitiMortgage and FirstMerit; El Lago Property mortgage to Nationstar; Harlem and Emerald properties formerly owned with related foreclosures; various unsecured debts including Nissan, Wells Fargo, and credit cards.
- Means Test calculations: total current monthly income argued at $9,410.56 after upward pension adjustment; deductions under §707(b)(2) totaling $7,887.13; disposable income appears $1,523.43 monthly, exceeding threshold to trigger presumption; case to be dismissed unless converted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the Debtors' debts primarily consumer debts? | FirstMerit: debts are primarily consumer; Debtors: not primarily consumer. | Debtors: not primarily consumer; FirstMerit: argument supports consumer majority. | Yes; Debtors' debts are primarily consumer debts. |
| Does §707(b)(2) presumption of abuse apply based on Means Test? | UPheld means test yields presumptive abuse due to income minus deductions. | Debtors did not show special circumstances to rebut presumption. | Yes; presumption of abuse arises under §707(b)(2) and is unrebutted. |
Key Cases Cited
- In re Sekendur, 384 B.R. 609 (Bankr. N.D. Ill. 2005) (defines 'primarily' as at least a majority for consumer debt.)
- Gates v. Caterpillar, 513 F.3d 680 (7th Cir. 2008) (conflicting deposition and affidavit evidence; proper handling at summary judgment stage.)
- Russell v. Acme-Evans Co., 51 F.3d 64 (7th Cir. 1995) (discusses disregard of conflicting affidavits unless plausible explanation.)
- Albrechtsen v. Bd. Of Regents of Univ. of Wisconsin Sys., 309 F.3d 433 (7th Cir. 2002) (courts may rely on counsel's guidance to review attached exhibits; not a search-without-guidance approach.)
- In re Briggs, 440 B.R. 490 (Bankr. N.D. Ohio 2010) (means test and inclusion of income; pension considerations under current monthly income.)
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (constitutional limits on bankruptcy courts deciding core issues.)