707(b)(2) May Help Debtors Under the Median Income

Posted on September 6, 2005 by Kevin Chern Esq.

Under the old bankruptcy law, the trustee could bring a 707(b) motion alleging abuse based on a debtor's ability to repay debt with expendable income. Under BARF 707(b)(2), the judge, trustee or creditor can all bring a 707(b) motion to dismiss if the debtor's household has more than the median income for a household of that size. Logic dictates that, under the same provision, neither a creditor, nor the judge, nor the trustee has a right to bring a motion to dismiss no matter how much expendable income the debtor has so long as the debtor's household has less than the median income for a household of that size.

So, in some situations under BARF, this bright line median income test will help debtors escape 707(b) objections. Of course, the judge or trustee can still bring a motion based on 707(b)(3) alleging that the case was not filed in good faith, but, certainly, no presumption of abuse exists.

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