Problem
Set 7, p.167
7.1
- §101 (10A): Average monthly income in the preceding 6 months.
- §707 (b) (6) only the judge or UST may file a motion under §707(b), if the current monthly income of the debtor is equal to or less than in the case a debtor in a household of 2, 3 or 4 individuals, the highest median family income of the applicable state for a family of the same number of fewer individuals. (General Abuse).
- §707(b)(7) — No judge, UST TIB or other parties in interest may file a motion to dismiss under §707(b)(2) if the current monthly income of the debtor is equal to or less than in the case a debtor in a household of 2, 3 or 4 individuals, the highest median family income of the applicable state for a family of the same number of fewer individuals. (The “Means” Test).
7.3
- He is slightly above the median. So he has to go through the means test. His surplus is $150, higher than $100 and lower than $166.66, so the test is whether the surplus is less than 25% of his unsecured debt divided by 60 about 30000/60*25%=$125. So his surplus is higher than $125, and he fails the means test. He is presumed to abuse the bankruptcy system.
- It seems like he would want to wait so his income goes below the median income. §526(a)(4).
- He could buy a car with financing expenses to get more valid expenses and make his disposable income so he meets the means test.
- §526(a)(4) — A debt relief agency should not advice the debtor to incur ore debt in contemplation of such person filing a case under this title. A lawyer should be a debt relief agency
- However, is it constitutional to limit the advice a lawyer can give? What if we advise him to give more to charity or get married? Use more money on food? Can the attorney advise the debtor to spend more expense?
- §707(b)(2)(B) — The presumption of abuse may only be rebutted by demonstrating special circumstances, such as a serious medical condition…; here is his leg injury a special circumstances?
- §101 (12A) — Definition of “debt relief agency”
7.4
- He is eligible for Chapter 7.
- Why does he pass the means test? It is not the consumer debt; it is business debt
Means
test only applies to the consumer debts. It seems hard to deny him
Chapter 7 relief under §707(b).
- But the judge has the discretion to deny the filing based on a totality of circumstances test for general abuse even though the debtor can pass the means test or the means test does not apply under §707(a). Do we like a totality of the circumstances test? Do we trust judges to decide who should be denied? Do we need this objective test?
7.5
- §707(a)(3) — File the info of paragraph (1) of §521 within 15 days after the filing the petition.
- §707(b)(4)(C)(D) — The attorney made the reasonable investigation and signed the petition with good faith that the did not know any incorrectness.
- §521 (a)(1) — The list of finance info of the debtor that he should file.
- You cannot skip this info or estimate it; otherwise the attorney is liable for any error without reasonable investigation.
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