Egebjerg

FACTS AND PROCEDURAL HISTORY

Egebjerg filed a voluntary Chapter 7 bankruptcy petition on December 31, 2006. At the time, he had been employed by Ralph’s grocery store for twenty-seven years and earned a gross income of $6,115.56 per month. Egebjerg was single with no assets. His only secured property was an automobile he used for work and a timeshare. He had unsecured con- sumer debt of about $31,000.

Approximately two years before he filed for bankruptcy, Egebjerg had taken a loan from his 401(k) plan. The plan automatically deducted $733.90 from his paycheck each month to repay this loan, which was scheduled to be fully repaid by September 2008. According to Egebjerg’s amended schedule of necessary expenses (in which he included the 401(k) repayment), he was left with a monthly disposable income of $15.31.

The U.S. Trustee moved to dismiss Egebjerg’s 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 nec- essary expense, Egebjerg’s filing was presumptively abusive under the “means test” of § 707(b)(2). The Trustee further argued that even if…