The United States Trustee filed a motion to dismiss seeking a one-year bar on future filings and a dismissal with prejudice under 11 U.S.C. § 349(a). A dismissal with prejudice would have the effect of prohibiting the debtor from ever discharging the debts that existed on the petition date. The debtor had filed seven bankruptcy cases in 11 years and made only one plan payment in the present case. The UST alleged the debtor abused the bankruptcy system with her repeated filings and that she acted in bad faith when she failed to disclose her interest in a business and a loan she received in 2021. The court determined the debtor's lack of good faith constituted cause to dismiss the case and bar the debtor from filing another petition for one year. The court found, however, that the debtor’s abuse of the bankruptcy system was not so egregious to warrant dismissal with prejudice under § 349(a). The court further concluded that, unlike the remedies provided in 11 U.S.C. § 727(a)(4), Congress did not intend to bar the discharge of debts for chapter 13 debtors whose only offense was providing inaccurate information on their schedules.
In re Fields, Case No. 21-26203 (March 2022) -- Judge R.M. Blise
The chapter 7 debtor failed to rebut the presumption under 11 U.S.C. § 524(m)(1) that her reaffirmation agreement with a car leasing company imposed an undue hardship. The debtor stated her intention in the agreement to reaffirm a $31,405.20 debt on a GMC Yukon XL and pay $1,046.84 per month for 30 months, plus all amounts due under the lease at termination. The court assumed for purposes of the decision that the debtor intended to reaffirm the debt under 11 U.S.C. § 524(c), rather than assume the lease under § 365(p), because the parties presented a reaffirmation agreement for the court's review. The debtor's schedules disclosed a net monthly income of $3,256.31 and monthly expenses of $4,080 with the lease payment, resulting in a monthly deficit of approximately $823. In disapproving the reaffirmation agreement, the court rejected the debtor's claims that she could make budget cuts to afford the payments, and her employment bonus and expected increase in work hours would cover the shortfall. The court noted that the monthly lease payment was more than 30% of the debtor's monthly income, more than triple her monthly food budget, and almost as much as she paid for rent. The debtor failed to show why it was necessary for her to retain a vehicle with such a high monthly payment when it was clear she could not afford the payment without sacrificing necessities or going into debt to cover her monthly expenses.