In re Weixel

Summarized by Dean Langdon , DelCotto Law Group PLLC
12 years 8 months ago

Citation:

13 FED App.0003P; BAP Case No. 12-8047

Tag(s):

Ruling:

The Sixth Circuit Bankruptcy Appellate Panel affirmed a ruling of the Northern District of Ohio Bankruptcy Court dismissing the debtors' Chapter 7 case as an abuse under the totality of the circumstances standard of 11 U.S.C. Sec. 707(b)(3). The BAP noted the changes BAPCPA made to Sec. 707 lowering the standard from "substantial abuse" to "abuse" and eliminating the presumption in favor of relief, and stated: "Overall, the record shows that the Weixels made no attempt to adjust their lifestyle over several years to address a house they could not afford and income taxes they were not paying."

Procedural context:

Debtors appealed a bankruptcy court order dismissing their case under 11 U.S.C. Sec. 707(b).

Facts:

Mr. Weixel had a mortgage brokerage which failed and works as a loan officer at an annual income of approximately $90,000. Mrs. Weixel operates a fitness studio which contributes after-tax income of approximately $3,000 per month to the household. The Weixels did not file several income tax returns and scheduled their tax obligations at $240,000. The Weixels have 5 minor children and live in 3,300 square foot home which they purchased with 100% financing in 2006. The Weixels made no mortgage payments since 2009 and filed their bankruptcy on the eve of a foreclosure sale. Although the Weixels' Schedule J did not include their $5,500/month mortgage payment, it did include a projected $3,500/month expense for future house; approximately triple the IRS standard expense for their household size. The U.S. Trustee took the position that they actually had over $2,000 a month in disposable income as a result. Other lifestyle issues included Mr. Weixel's poker playing with attendant travel expenses and bank statements which reflected continued spending on entertainment even when the account was overdrawn. The BAP went deeply enough into the record to note specific pre and postpetition payments to restaurants for amounts ranging from $36 to $78, including the $41 spent at a wine bar on the day they completed their financial education course.

Judge(s):

Humphrey, McIvor and Preston; Opinion by Humphrey

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