The quickest way to have your Chapter 7 bankruptcy petition dismissed is to fail the means test.  A debtor who fails the means test raises a rebuttable presumption of abuse. In the event a presumption of abuse exists, 11 U.S.C. § 707(b)(2) authorizes the court, US trustee or any part in interest to file a motion to dismiss as long as the individual debtor’s debts are primarily consumer debts. However, if the debtor is a “below median debtor” as calculated by 11 U.S.C. § 707(b)(6)( or (b)(7), a motion to dismiss pursuant to 11 U.S.C. § 707(b)(2) can only be brought by a judge or US trustee. When considering whether to grant a motion to dismiss pursuant to 11 U.S.C. § 707, the court looks to whether the debtor has the ability to pay either: (1) 25 percent of his or her nonpriority unsecured claims in the case, or $6,575, whichever is greater; or (2) $10,950. 11 U.S.C. § 707(b)(2)(A)(i). If either factor exists based on the information provided on the bankruptcy petition, the motion to dismiss can only be defeated by demonstrating that “special circumstances” exist.

In order to establish “special circumstances”, a debtor is required to itemize each additional expense or adjustment of income and to provide: (1) documentation for such expense or adjustment to income; (2) a detailed explanation of the special circumstances that make such expenses or adjustment to income necessary and reasonable; and (3) testimony under oath that the additional information provided is accurate and that the additional expenses or adjustments to income are required. 11 U.S.C. § 707(b)(2). If satisfied that special circumstances exist, a motion to dismiss pursuant to 11 U.S.C. § 707(b)(2) can still only be denied if the debtor meets the mathematical requirements of the means test to rebut the presumption of abuse.

Defeating a motion to dismiss is not impossible, but requires knowledge of the petition, necessary documentation to demonstrate that “special circumstances” exist and knowledge of the debtor’s finances. If possible, it is best to delay filing a bankruptcy petition until the debtor’s income and expenses allow him or her to pass the means test without raising the presumption of abuse. A debtor and attorney must keep in mind that if a motion to dismiss pursuant to 11 U.S.C. § 707(b)(2) or (b)(3) is granted, the court can order the attorney for the debtor to reimburse the trustee for reasonable costs associated with bringing the motion including attorney fees. 11 U.S.C. § 707(b)(4).

- Richard V. Stokan, Jr.