Melissa Ann Ellison, 663 B.R. 743

Melissa Ann Ellison filed for Chapter 7 bankruptcy, declaring primarily consumer debts totaling $76,185.17 and a negative net monthly income.
The U.S. Trustee moved to dismiss the case under 11 U.S.C. § 707(b), arguing Ellison could repay a substantial portion of her unsecured debts in Chapter 13 due to adjusted income and elimination of certain expenses.
The Debtor’s non-filing spouse has significant monthly income, which, after recalculation by the Trustee, increased household disposable income.
The main dispute centered on whether certain discretionary expenses (taekwondo, gym membership, and violin lessons) were reasonably necessary.
After elimination or reduction of these expenses, the Debtor’s hypothetical repayment in Chapter 13 would be about 21% of unsecured claims or over $22,000 total.
The court held a hearing, considered factual stipulations, and ultimately found the Trustee's position persuasive under the totality of the circumstances test in § 707(b)(3).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Dismissal for abuse under § 707(b)(3)	Ellison can repay creditors	She cannot make substantial payments	Dismissal granted; income allows substantial repayment
Reasonableness of taekwondo and gym expenses	Not necessary, should be excluded	Necessary for family and health	Expenses deemed discretionary/unnecessary
Reasonableness of violin lessons expense	Not necessary, should be excluded	Reasonable, modest, supplements school	Did not decide; not determinative
Whether total hypothetical repayment is substantial	Repayment > $15,000 or ~21% is substantial	Not substantial enough	Payment amount is substantial; supports dismissal

In re Walton, 866 F.2d 981 (8th Cir. 1989) (ability to fund Chapter 13 plan can establish substantial abuse)
Fonder v. United States, 974 F.2d 996 (8th Cir. 1992) (same principle regarding substantial abuse)
In re Koch, 109 F.3d 1285 (8th Cir. 1997) (substantial abuse found where repayment possible)