《楊清泉律師專欄》MEANS TEST NOT CONCLUSIVE ON DEBTOR ABILITY TO PAY(PART I)

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According to the means test, debtors had no disposable income. The bankruptcy court concluded that it would be an abuse of Chapter 7 to grant a discharge to debtors based on the totality of circumstances. In reaching this conclusion, the court found the “totality of the circumstances” test used in Green v. Staples (1991) to be helpful even though the statutory underpinnings of Green were no longer present. The Green factors are:

1. Was bankruptcy relief sought after the debtor experienced a sudden illness, calamity, disability, or unemployment?
2. Did the debtor incur cash advances and make consumer purchases far in excess of his ability to repay?
3. Is the debtor’s budget excessive or unreasonable?
4. Do the bankruptcy schedules and statements reasonably and accurately reflect the debtor’s true financial condition?
5. Was the petition filed in good faith?

Debtors objected to the dismissal of their case based on their ability to pay. On appeal, they asserted that Green prohibits a dismissal on that ground alone. They also argued that the means test is conclusive on the eligibility for Chapter 7 relief.

The 4th Circuit said that “We can readily dispense with the last argument… The means test is not conclusive, the presumption is rebuttable, and a court may still find abuse even if there is no presumption…”

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty+ years. He specializes in bankruptcy, business and civil litigation and has handled more than four thousand successful bankruptcy cases in California. He speaks Mandarin & Fujien and looks forward to discussing your case with you personally. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.