In the bankruptcy case of Hunt, Rodger and Zelda; In re, the bankruptcy court denied the bankruptcy trustee's motion to dismiss the debtors' Chapter 7 bankruptcy case.
The details of the bankruptcy case:
The Chapter 7 debtors were married, but living separately. They had two children, both of whom lived with their mother. The debtors had a combined net monthly income of $5,729 after deducting an optional retirement program payment of $436. Schedule J showed monthly expenses of $8,588, which included $3,003 for the husband's mortgage expense and $480 for a credit card payment. Without these expenses, the debtors' monthly income exceeded their expenses by $1,061. The bankruptcy filing was precipitated by an increase of some 80 percent in the amount of the husband's mortgage payments plus the increased expenses related to maintaining two households. Because the husband's residence was worth substantially less than the amount owed on the mortgage, he intended to surrender the property and move into an apartment or find other living arrangements. The U.S. Trustee asked the court to dismiss the debtors' case pursuant to Section 707(b)(3).
The bankruptcy court ruled that the bankruptcy trustee failed to consider the fact that the debtor-husband would still need to spend money to find and maintain his new home and that the debtor-wife was likely to experience a reduction of income due to labor negotiations. The bankruptcy court also estimated that the debtor-husband would need to pay at least $1000 a month in rent and that considering all of those facts there would be no surplus for the debtors to fund a Chapter 13 bankruptcy plan. The bankruptcy court ruled that the debtors' Chapter 7 bankruptcy case should not be dismissed.