Lisa R. Hebbring v. U.S. Trustee

We must decide whether a debtor seeking protection under Chapter 7 of the Bankruptcy Code may ever include voluntary contributions to a retirement plan as a reasonably necessary expense in calculating his disposable income. We hold that the Bankruptcy Code does not disallow such contributions per se, but rather requires courts to examine the totality of the debtor’s circumstances on a case-by-case basis to determine whether retirement contributions are a reasonably necessary expense for that debtor. In this case the bankruptcy court did not clearly err in finding that Lisa Hebbring’s voluntary retirement contributions are not a reasonably necessary expense based on her age and financial circumstances, and thus that she has sufficient disposable income to repay her creditors. We therefore affirm the district court’s decision affirming the bankruptcy court’s dismissal of Hebbring’s petition on the ground that allowing her to proceed under Chapter 7 would be a substantial abuse of the Code.

I

Lisa Hebbring filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Nevada on June 5, 2003, seeking relief from $11,124 in consumer credit card debt.…