The United States Trustee program reviews every bankruptcy filing to prevent abuse of the bankruptcy code. Passing the means test creates a presumption that the individual filing is not abusing the code and qualifies for a chapter 7 bankruptcy; however the U.S. Trustee can attempt to overcome that presumption even if the debtor passes the means test.
11 U.S.C. § 707(b)(3) provides the U.S. Trustee’s attorneys with two additional arguments that they can make if they feel that a filing abuses the U.S. code. The U.S. Trustee can argue against the chapter 7 bankruptcy filing based on an actual abuse or on a totality of the circumstances argument. More simply put, a chapter 7 bankruptcy filing can be dismissed by the Court if it is determined that the debtor does have an ability to pay some or all of their debts.
Dismissals that are based on actual abuse typically center on some sort of action that the debtor took right before the filing of the chapter 7 bankruptcy. An example would be quitting a job so that one can pass the means test only to be hired back immediately after filing the bankruptcy.
Dismissals based on the totality of the circumstances test focus on the amount of money that a debtor could pay back in a reorganization chapter 13 bankruptcy based on their actual income and expenses rather than the projected expenses that are used in the means test. This test can be tricky for debtors to prepare for because the court has broad discretion when considering any circumstances that it believes is relevant when making a decision under the totality of circumstances test.
The Orlando bankruptcy attorneys at Cleaveland & Cleaveland, P.L offer a free consultation and can provide additional information regarding a chapter 7 bankruptcy or a chapter 13 bankruptcy. Additionally, hiring an experienced bankruptcy attorney in Orlando may reduce the likelihood of a dismissal.. Please contact our office at (407) 893-5200
