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9th Circuit - Egebjerg: No. 08-55301 - 707(b)(3) abuse for 401k
This winning hand of Scrabble is where the 9th Circuit held that a 707(b)(3)
dismissal was proper where a 401k loan repayment deduction in Form B22 was
listed as a necessary expense, thus the presumption of abuse applies,
unrebutted.
Key allegation (p.6383)
The U.S. Trustee moved to dismiss Egebjergs Chapter 7 petition, arguing
that Egebjerg had improperly included the 401(k) repayment in his necessary
expenses. If, the Trustee urged, this amount were not subtracted from income
as a necessary expense, Egebjergs filing was presumptively abusive under
the means test of 707(b)(2). The Trustee further argued that even if the
presumption of abuse did not arise under 707(b)(2), the court should still
dismiss the case because, under the totality of the circumstances, Egebjerg
had sufficient means to repay a meaningful portion of his debts, especially
once his 401(k) loan was repaid.
Held (p.6394)
Thus, on this record, while we agree with the bankruptcy courts bottom line
conclusion, it erred by concluding Egebjerg had demonstrated special
circumstances under 707(b)(2)(B). Because Egebjerg thus did not rebut the
presumption of abuse under 707(b)(2)(A), the bankruptcy court properly
dismissed Egebjergs Chapter 7 petition.
Hale
This winning hand of
Scrabble is where the 9th Circuit held that a 707(b)(3) dismissal was proper
where a 401k loan repayment deduction in Form B22 was listed as a necessaryexpense, thus the presumption of abuse applies, unrebutted.
Key
allegation (p.6383)
The U.S. Trustee moved to dismiss Egebjergs Chapter 7 petition, arguing that Egebjerg had
improperly included the 401(k) repayment
in his necessary expenses. If, the Trustee
urged, this amount were not subtracted from income as a necessary expense, Egebjergs filing was presumptively
abusive under the means test 707(b)(2). The Trustee further argued
that even if the presumption of abuse did not arise under 707(b)(2), the
court should still dismiss the case because, under the totality of the
circumstances, Egebjerg had sufficient means to repay a meaningful portion of
his debts, especially once his 401(k) loan was
repaid.
Held
(p.6394)
Thus, on this record, while we
agree with the bankruptcy court line conclusion, it erred by concluding Egebjerg had demonstrated special circumstances under 707(b)(2)(B). Because Egebjerg thus did not
rebut the presumption of abuse under
707(b)(2)(A), the bankruptcy court
properly dismissed Egebjergs Chapter 7 petition.
Hale
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