Debtor Maintaining Expenses for Two Houses Not Abuse of Ch. 7

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By Diane Davis

A debtor who has expenses maintaining two homes didn’t abuse the provisions of Chapter 7 bankruptcy and his case won’t be dismissed, the U.S. Bankruptcy Court for the Western District of Virginia held ( Robbins v. Hall (In re Hall) , 2017 BL 227913, Bankr. W.D. Va., No. 16-61894, 6/30/17 ).

The Chapter 7 trustee failed to prove abuse even though he asked the court to consider the “totality of the debtor’s financial circumstances” and find an abuse as a basis to dismiss this case under Bankruptcy Code Section 707(b)(1), Judge Rebecca B. Connelly wrote June 30.

Under Fourth Circuit precedent, Green v. Staples (In re Green), the court had to consider whether there is “abuse of the bankruptcy process by a debtor seeking to take unfair advantage of his creditors.”

Vance Hall owned a home with two mortgages on it. After he got married and had three children, he incurred more than $60,000 in student loan debt to get a master’s degree to advance his career.

When Hall’s 72-year old mother-in-law, who suffered from dementia, needed to move into their home, his wife purchased a larger one.

Both Hall and his wife changed jobs since he filed Chapter 7. Hall’s wife didn’t file Chapter 7 with him.

Maintaining Two Properties

The trustee conceded that there was no presumption of abuse in this case.

A Chapter 7 discharge is presumptively abusive if “debtors, whose income exceeds the applicable median family income, have disposable income as calculated under Section 707(b)(2) statutory threshold test to establish a presumption of abuse,” the court said.

The trustee didn’t argue that Hall filed the petition in bad faith, but he did have a problem with Hall’s maintaining expenses for two households. According to the trustee, if Hall sells one of the houses, he could repay his creditors.

After examining Hall’s expenses, the court found that his continued maintenance of both properties isn’t an abuse of Chapter 7.

Although Hall could provide a dividend to his creditors if he filed for Chapter 13 instead of Chapter 7, the fact that he chose not to file Chapter 13 isn’t an abuse, the court said.

Hall’s lifestyle choices weren’t reckless or lavish, the court said. It was okay for Hall to want to “relieve himself from personal mortgage liability that has stretched his family’s finances to the breaking point,” the court said.

Rogan Law Firm, PLLC, Leesburg, Va., represented Hall; Trustee W. Stephen Scott, Charlottesville, Va., represented himself.

To contact the reporter on this story: Diane Davis in Washington at

To contact the editor responsible for this story: Jay Horowitz at

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