Bankruptcy Court Recomputes Disposable Income and Dismisses

The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

In re Robrock, 430 B.R. 197 (Bankr. D. Minn. 5/21/2010) (Kishel, J.).

Case Summary:

Bankruptcy Court Recomputes Disposable Income and Dismisses
The bankruptcy court granted the UST’s motion to dismiss the debtor’s chapter 7 case under 11 U.S.C. §§ 707(b)(1) – (2). The debtor, Robrock, earned over $19,000 per month as a physician. The court found Robrock’s CMI to be approximately $20,095. The court noted that the UST should have looked at income earned during the relevant six-month period, rather than income received during that six-month period. The court also included in its calculations Robrock’s ex-wife’s payments toward maintenance of their recreational property, and adjusted the calculations to reflect a salary offset during that time period. Robrock’s actual monthly car payment was not used; instead, the court calculated his payment by dividing by 60 the outstanding principal balance as of the date of his filing. Robrock’s ongoing obligations under mortgages on his ex-wife’s home were not secured debts in bankruptcy, so he was not entitled to reduce his CMI on account of them. Robrock’s deduction for his income tax liability was reduced based on the UST’s calculations because Robrock had calculated his figures based on previous over-withholding. Robrock sought to reduce his CMI by his payments to repay a 401K withdrawal, but the court held that it was not a debt under § 707(b)(2), let alone a secured debt, so it could not be used to reduce his CMI for the means test. Similarly, Robrock could not reduce his CMI to account for credit card payments.

After calculating Robrock’s CMI to be approximately $20,095, the court found that his 60-month disposable income under § 707(b)(2) of $97,937.20 exceeded the threshold of abuse under § 707(b)(2)(A)(i). Having found that the presumption of abuse applied, the court found that Robrock had not presented evidence to overcome the presumption and dismissed his case.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & Attorney Faye Knowles.

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