652 B.R. 124
Bankr. D. Mass.2023Background
- Debtor William C. Tapply filed a Chapter 7 petition (Nov. 24, 2021) and reported above‑median income, triggering the § 707(b)(2) means test analysis.
- Debtor’s scheduled nonpriority unsecured debt ≈ $116,130; initial Schedules I/J showed negative net income but Means Test produced a presumption of abuse.
- Debtor claimed marital adjustments (non‑filing spouse’s payments) for the spouse’s credit cards, the daughter’s dance, and the son’s college tuition, and asserted a special‑circumstances adjustment based on the spouse’s refusal to pay Debtor’s debts.
- The U.S. Trustee moved to dismiss under §§ 707(b)(1)–(2); an evidentiary hearing was held and the Debtor filed an amended Means Test per court order.
- The court disallowed the marital adjustments for the spouse’s credit card payments, the daughter’s dance, and the son’s tuition as household expenses, found the spouse’s refusal is not a compensable special circumstance, concluded the presumption of abuse arises, and dismissed the case.
Issues
| Issue | Plaintiff's Argument (UST) | Defendant's Argument (Tapply) | Held |
|---|---|---|---|
| Whether marital adjustments may exclude spouse’s payments for daughter’s dance and son’s college tuition | These payments are household expenses for the benefit of dependents and cannot be excluded | Payments are not "normal" household expenses and may be excluded as marital adjustments | Disallowed: payments for dependents are household expenses and not "purely personal" to spouse |
| Whether marital adjustment may exclude spouse’s credit‑card payments | Debtor failed to prove charges were purely personal to spouse; allowance would permit double‑dipping | Credit‑card payments are not normally household expenses and may be excluded | Disallowed: debtor did not prove charges were purely personal; burden on debtor after trustee’s prima facie showing |
| Who bears burden to prove marital adjustment is for non‑household expenses | Trustee: make prima facie showing; then debtor must prove non‑household nature | Debtor: contended spouse’s noncontribution justifies exclusion | Court follows Montalto: spouse’s income presumed for household; once UST makes prima facie case, debtor must prove non‑household nature |
| Whether spouse’s refusal to contribute is a § 707(b)(2)(B) "special circumstance" to rebut presumption | Refusal is not a permitted special circumstance; allowing it would circumvent § 101(10A) inclusion of spouse’s support | Debtor: spouse’s refusal to apply funds toward Debtor’s debts justifies adjustment/reduction | Held: refusal to contribute is not a special circumstance; cannot be used to evade CMI definition; presumption not rebutted; case dismissed |
Key Cases Cited
- In re Montalto, 537 B.R. 147 (Bankr. E.D.N.Y. 2015) (non‑filing spouse’s income presumed to fund household expenses; debtor must prove any non‑household deductions after movant’s prima facie showing)
- In re Persaud, 486 B.R. 251 (Bankr. E.D.N.Y. 2013) (payments by non‑filing spouse for dependents are household expenses; spouse’s refusal to fund a Chapter 13 plan is not a special circumstance)
- In re Rable, 445 B.R. 826 (Bankr. N.D. Ohio 2011) (marital adjustment analysis focuses on nature of the expense rather than legal liability)