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POSTED ON WEBSITE

3 NOT FOR PUBLICATION 4 5

UNITED STATES BANKRUPTCY COURT

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EASTERN DISTRICT OF CALIFORNIA

7 8 9 10 In re ) Case No. 23-90146-E-7 11 ) Docket Control No. UST-1

MARCO VINICIO ALATORRE )

12 || ZAMORA and MIREYA ALATORRE, _ ) ) 13 Debtors. )

14 15 || This Memorandum Decision is not appropriate for publication. It may be cited for persuasive value on the matters addressed. 16 17 MEMORANDUM OPINION AND DECISION 18 The United States Trustee, Tracy Hope Davis (“U.S. Trustee’), seeks dismissal of this 19 || voluntary Chapter 7 Case filed by Marco Vinicio Alatorre Zamora and Mireya Alatorre, the Debtors. 20 || The statutory basis under which dismissal is requested is 11 U.S.C. § 707(b)(1) and (b)(3)(B), based 21 || on the following grounds stated with particularity (Fed. R. Bank. P. 9013), as summarized by the 22 || court (except when the text is set in “quotation marks’’) and identified by paragraph number used 23 || in the Motion: 24 1. “The Debtors’ case should be dismissed under 11 U.S.C. §§ 707(b)(1) and 707(b)(3) because their disposable income is sufficient to pay a meaningful 25 portion of their debts.” 26 Further, that Debtors’ monthly income and expenses as stated on Schedules I and J are sufficient to pay all unsecured claims in full in less than 27 20 months. 28 2. The Motion is stated to be based on:

1 a. The Points and Authorities, 2 b. Exhibits, and 3 C. Everything else filed in this Bankruptcy Case. 4 || The Declaration filed with the Motion states many “grounds” with particularity. Dckt. 24. Such 5 || grounds upon which the requested relief is based are to be stated with particularity in the motion 6 || (Fed. R. Bankr. P. 9013). The same is true for the Points and Authorities, which states with 7 || particularity grounds and facts, which are to be stated with particularity in the Motion. Dckt. 25. 8 || Debtors’ Opposition 9 Debtors Marco Vinicio Alatorre Zamora and Mireya Alatorre filed an Opposition on 10 |} August 24, 2023. Dckt. 27. Debtors state: 11 1. U.S. Trustee has failed to file and provide notice of their Statement of 12 Presumed Abuse, which is required prior to filing a motion to dismiss under 11 U.S.C. § 704(b)(2). 13 2. Debtors’ monthly income throughout the year is less than the period U.S. 14 Trustee reviewed, due to Debtors’ layoff period. 15 3. U.S. Trustee has not provided facts to support Debtors acted in bad faith. 16 || U.S. Trustee Reply to Debtors’ Opposition 17 The U.S. Trustee filed a Reply to Debtors’ Opposition on August 31, 2023. Dckt. 27. In her 18 || response, the U.S. Trustee states: 19 1. Despite Debtors suggesting to the contrary, a debtor’s ability to repay a 20 meaningful portion of their debts justifies dismissal under 11 U.S.C. § 707(b)(3). 21 2. Debtors have disposable income to pay creditors and have demonstrated a 22 likelihood of sufficient future income to repay their creditors. 23 |) Dekt. 30. 24 || U.S. Trustee Second Reply 25 On October 12, 2023, the U.S. Trustee filed a Response in the wake of the September 7, 2023 26 || hearing, updating the court on what has since transpired in the Bankruptcy Case. Response; 27 | Dckt. 35. U.S. Trustee filed the Declaration of Laurie Brugger in support of this Response. 28 || Declaration; Dckt. 36. In her Response, the U.S. Trustee states:

l 1. Debtors appear to have $2,370.87 in monthly net income available for payments to creditors, according to their amended Schedule I and subtracting 2 Schedule J expenses. Therefore, Debtors should have its case dismissed under 11 U.S.C. § 707(b)(3) because it has sufficient income to make 3 payments. 4 2. In defiance of this court’s September 12, 2023 Order, Debtors have not provided adequate support or documentation for Amended Schedule I. Even 5 still, taking the Amended Schedule I as accurate, Debtors still have $2,370.87 available to make monthly payments. 6 7 || Dekt. 35. 8 || Amended Schedule I 9 On October 10, 2023, Debtors filed an Amended Schedule I. Dckt. 34. On it, Debtors list 10 || having gross monthly income of $9,692.00 a month. After withholdings and deductions, Debtors’ 11 |] Combined Monthly Income (line 12) stated on Amended Schedule I is $7,647.00. /d. at 2. This is 12 || ($885) less than the $8,532.53 stated on Original Schedule I. Dckt. 1 at 28. 13 || Supplemental Pleadings Ordered to be Filed 14 As stated on the Record at the October 19, 2023 Hearing, the court ordered supplemental 15 || briefing by the Parties on the following points: 16 (1) The applicable law, post-BAPCPA on what is considered and constitutes the “totality of the circumstances” for dismissal of a bankruptcy case as provided in 11 U.S.C. 17 § 707(b)(1) and (b)(3) as “an abuse of the provisions of [Chapter 7 of the Bankruptcy Code]”; 18 (2) The proper weight given to the debtor’s income and ability to fund a Chapter 13 plan 19 in determine whether abuse exists under 11 U.S.C. § 707(b)(1) and (b)(3), and the consideration of such in context of any presumption of abuse under 11 U.S.C. 20 § 707(b). 21 || Debtors Not Filing a Supplemental Brief 22 Debtors did not file a supplemental brief addressing the issues identified by the court. 23 || U.S. Trustee Supplemental Brief 24 The U.S. Trustee filed a Supplemental Brief addressing these points. Sup. Brief; Dckt. 42. 25 || The further arguments of the U.S. Trustee are summarized as follows: 26 A. BAPCAP did away with a debtor’s “right” to a Chapter 7 discharge, and imposes a bankruptcy scheme in which reasonable payments, if possible, will be made to 27 creditors by debtors who have projected disposable income. 28 ///

l B. Under the totality of the circumstances test for abuse, a debtor’s ability to make a meaningful payment to creditors is the primary factor to be considered. The U.S. 2 Trustee directs the court to consider the analysis of this issue by the Ninth Circuit in Inre Price, 353 F.3d 1135, 1139-40 (9th Cir. 2003), predating the 2005 amendments, 3 and by the Bankruptcy Appellate Panel in Jn re Ng, 477 B.R. 118, 125-26 (B.A.P. 9th Cir. 2012). 4 C. Dismissal of a case for abuse under 11 U.S.C. § 707(b)(2) and § 707(b)(3) are two 5 separate grounds for dismissal. 6 DISCUSSION 7 The court addresses the grounds upon which the Motion to Dismiss is based and the 8 |] oppositions thereto. 9 || U.S. Trustee’s Failure to File Statement Regarding Presumption 10 || of Abuse, § 704(b)(2)(A) Notice Requirement 11 Pursuant to 11 U.S.C. § 704(b)(1)(A), a United States Trustee is required to file a statement 12 || within ten (10) days of the first meeting of creditors that advises the court whether a debtor’s case 13 || would be presumed abuse under § 707(b) and then provide such statement to all creditors. 14 (b) 15 (1) With respect to a debtor who is an individual in a case under this chapter — 16 (A) the United States trustee (or the bankruptcy administrator, if any) shall 17 review all materials filed by the debtor and, not later than 10 days after the date of the first meeting of creditors, file with the court a statement as to 18 whether the debtor’s case would be presumed to be an abuse under section 707(b); and 19 (B) not later than 7 days after receiving a statement under subparagraph (A), 20 the court shall provide a copy of the statement to all creditors. 21 |} 11 U.S.C. § 704(b)(1)(A). This statement must be filed by such United States Trustee in the 22 || bankruptcy case if the presumption of abuse is to be asserted as a basis to dismiss the Chapter 7 case. 23 || 6 Collier on Bankruptcy P 704.16 (16th 2023). 24 Reading the plain language of the Bankruptcy Code, both the statement to be filed with the 25 || court and the motion to dismiss referred to in § 704(b)(2)(A) relate to the United States trustee’s 26 || right to bring a motion to dismiss where the presumption of abuse exists, not in cases brought to 27 || dismiss under the totality of circumstances. See also Fokkena vy. Draisey In re Draisey), 395 B.R. 28 || 79, 82 (B.A.P. 8th Cir. 2008). Therefore, if a United States Trustee fails to file the statement on

1 || time, such United States Trustee may not seek to dismiss the case based on a presumption of abuse 2 | under § 707(b)(2). However, a United States Trustee may still seek dismissal of a Chapter 7 case 3 || under other provisions of 11 U.S.C. § 707, including §§ 707(b)(1) and (3). 6 Collier on Bankruptcy 4 || P 704.16 (16th 2023); See also, Fokkena v. Draisey Un re Draisey), 395 B.R. at 82 (“Filing the 5 || § 704(b)(1) statement is a condition precedent to filing a motion to dismiss under § 707(b)(2), not 6 || to filing a motion to dismiss under § 707(b)(3)(B).”). 7 Here, the U.S. Trustee seeks to dismiss the case pursuant to 11 U.S.C. §§ 707(b)(1) and 8 |] (b)(3)(B), which are not based on a presumption of abuse for which a statement is required pursuant 9 toll U.S.C. § 704(b)(2). Although the U.S. Trustee would be required to file a statement regarding 10 || the presumption of abuse if such relief was sought, the court finds that the failure to file such a 11 |] statement does not preclude the U.S. Trustee from bringing the present Motion seeking dismissal 12 || on grounds other than a presumption of abuse. 13 Grounds to Dismiss Pursuant to 14 || 11 U.S.C. §§ 707(b)(1) and (3) 15 Pursuant to 11 U.S.C. § 707(b)(1), after notice and hearing, the court may dismiss or convert 16 || a Chapter 7 case if it finds that granting of relief would be an abuse of the provisions of Chapter 7. 17 18 § 707. Dismissal of a case or conversion to a case under chapter 11 or 13 19 (b) 20 (1) After notice and a hearing, the court, on its own motion or on a motion by the United States trustee, trustee (or bankruptcy administrator, if any), or any party in 21 interest, may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s consent, convert such a case 22 to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter. In making a determination 23 whether to dismiss a case under this section, the court may not take into consideration whether a debtor has made, or continues to make, charitable 24 contributions (that meet the definition of “charitable contribution” under section 548(d)(3)) to any qualified religious or charitable entity or organization (as that term 25 is defined in section 548(d)(4)). 26 | 11 U.S.C. § 707(b)(1). In seeking such relief pursuant to 11 U.S.C. § 707(b)(1) there is no 27 || presumption of abuse existing against Debtor. Section 707(b)(3), however, governs relief sought 28 || pursuant to 11 U.S.C. § 707(b)(1), when there is no presumption of abuse, and gives the court

1 || discretion to determine whether the petition was filed in bad faith or, under the totality of the 2 || circumstances, whether a debtor’s financial situation and conduct demonstrate abuse. 3 § 707. Dismissal of a case or conversion to a case under chapter 11 or 13 4 (b) 5 (3) In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter [Chapter 7] in a case in which the presumption 6 in paragraph (2)(A)(i) does not arise or is rebutted, the court shall consider — 7 (A) whether the debtor filed the petition in bad faith; or 8 (B) the totality of the circumstances (including whether the debtor seeks to reject a personal services contract and the financial need for such rejection 9 as sought by the debtor) of the debtor’s financial situation demonstrates abuse. 10 11 U.S.C. § 707(b)(3). 11 The U.S. Trustee argues grounds exist under § 707(b)(3) to dismiss the case based on the 12 totality of the circumstances. In the U.S. Trustee’s Memorandum of Points and Authorities, 13 Dekt. 25, the U.S. Trustee states that Debtors’ disposable income is $3,256.24, which would pay off 14 Debtors’ scheduled unsecured debt of $63,351.00 in twenty (20) months.’ Additionally, U.S. 15 Trustee states that Debtors have demonstrated an ability to pay as debtor Marco Vinicio Alatorre 16 Zamora testified that they are working full time again with their employer of almost twenty (20) 17 years, with regular overtime. 18 Debtors, however, argue that their monthly income fluctuates throughout the year. 19 Opposition, Dckt. 27. Debtors argue that their monthly income for 2022 was $6,568.00, their 20 monthly income for 2021 was $7,091.74, and their monthly income for 2020 was $6,797.45. 21 Debtors, curiously, admit that if they use their disposable income from 2022, it would take them fifty 22 (50) months to pay off their unsecured claims. 23 Debtors’ Declaration in support of their Opposition states, under penalty of perjury, that their 24 income for this year will be similar to that of 2022, or less. Declaration of debtor Mario Vinicio 25 Alatorre Zamora; Dckt. 28 47. Debtors do not indicate why their income for this year will be less 26 27 ' On Schedule E/F, Debtors state under penalty of perjury that they have ($63,351) in 28 || general unsecured debt and no priority unsecured claims. Schedule E/F; Dekt. 1 at 18 - 24.

1 || than in 2022. 2 Debtors state they anticipate their disposable income will be only about $1,542.00. 3 |] Declaration, Dckt. 28. This is inconsistent with Debtors’ Original Schedule I (stating under penalty 4 || of perjury Debtors’ Combined Monthly Income) and Schedule J (stating Debtors’ Monthly 5 || Expenses). Dckt. 1 at p. 27-31. This is also inconsistent with the projected disposable income based 6 |} on Amended Schedule I, Dckt. 34, in which Debtors state under penalty of perjury a lower 7 || Combined Monthly Income (after all deductions) of “only” $7,647.19. No Amended Schedule J has 8 || been filed. 9 Debtors state under penalty of perjury on Original Schedule I that their Combined Monthly 10 || Income (after all deductions) is $8,532.53 and on Schedule J that their monthly expenses, including 11 || the secured claim car payment, are ($5,276). Dckt 1 at 27-31. This provides Debtors’ with monthly 12 || net income of $3,256.24 available to fund a Plan or pay creditors. Debtors state, under penalty of 13 perjury on Original Schedule I and Schedule J, that they do not expect an increase or decrease of 14 || their monthly income or monthly expenses within the year after filing those Schedules. /d.; p. 31, 15 |} Line 24. Contrary to these statements under penalty of perjury, Debtors’s counsel argues in their 16 || Opposition that Debtors do anticipate a decrease in income, due to an anticipated slowdown in 17 || debtor Marco Vinicio Alatorre Zamora’s work. 18 As stated above, on October 10, 2023, Debtors filed their Amended Schedule I. Dckt. 34. 19 || Using the lower Combined Monthly Income (after all deductions) of $7,647.00 shown on Amended 20 |] Schedule I, and deducting the monthly Expenses of ($5,276) stated on Schedule J (Dckt. 1), 21 || Debtors’ Monthly Net Income after all Deductions (Amended Schedule I) and Expenses 22 || (Schedule J) is $2,371.00. As computed below, the $2,371.00 in projected monthly income is still 23 || adequate to fund a Plan to provide for a 100% dividend for creditors holding general unsecured 24 |) claims which are listed as being ($63,351). Schedule E/F, Dckt. 1. Debtors also state under penalty 25 || of perjury on Schedule E/F that they have no priority unsecured debt. /d. 26 In computing the treatment of creditor claims in a Chapter 13 Case, Chapter 13 Trustee fees 27 || and administrative expenses for a Chapter 13 case are approximately 7.2% (such fees subject to 28 || adjustment by the U.S. Trustee). Additionally, as provided in Local Bankruptcy Rule 2016-1(c)(1),

1 || the flat fees for Chapter 13 debtors counsel (for which no further court approval is required) are 2 || $8,500.00 (or whatever lesser amount a debtor’s counsel would agree). If Debtors were to fund a 3 |] Chapter 13 Plan, based on a 100% unsecured claim dividend plan and if Debtors’ counsel would 4 || seek the full $8,500.00 in fees for such a simple plan, the following amounts would need to be 5 || funded: 6 A. Chapter 13 Trustee Fees and Expenses, 7.2%.................($5,580) 7 B. Chapter 13 Debtors’ Counsel’s Fees and Costs...............($8,500) 8 C. General Unsecured □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 963,351), 9 || which would require a Chapter 13 Plan to be funded with $77,500.00. Over the term of a sixty- 10 | month plan, that would require monthly plan payments of $1,291.66. If Debtors were to fund it with 11 |] their projected disposable income of $2,371.00 a month, the 100% dividend plan would be 12 || completed in just thirty-three (33) months. 13 Thus, even with the lower take home income amount of $7,647.00 stated on Amended 14 |] Schedule I under penalty of perjury by Debtors (Dckt. 34) shows that there is sufficient projected 15 || disposable income to fund a 100% unsecured claim dividend Plan and creditors paid in full in just 16 || thirty-three months. 17 || Prior Chapter 7 Filing and Discharge 18 The court notes that Debtors, represented by the same counsel as in the present case, filed 19 || a Chapter 7 Bankruptcy Case on July 30, 2014. Case 14-91090. Each of the two Debtors were 20 || granted their Chapter 7 discharges in Case 14-91090 on November 10, 2014. 21 The current Bankruptcy Case was filed on July 31, 2023, nine years after the filing of the 22 | 2014 case. 11 U.S.C. § 727(a)(8) bars the granting of a discharge in a Chapter 7 case if a Chapter 7 23 || discharge was granted for a debtor in a prior case filed within eight years of the then current case. 24 || Information on Schedules 25 Looking at Debtors’ Schedule A/B, no real property interests are listed by Debtors. 26 || Amended Schedule A/B; Dckt. 17 at 1. On Amended Schedule A/B, Debtors’ personal property 27 || assets total $32,767.00. Jd. at 1-7. 28 Reviewing Schedule J Expenses, Debtors (as opposed to many other debtors who

1 || unrealistically lower expenses to create the appearance of having projected disposable income) 2 || appear to be more realistic (erring on the higher side) on expenses, including monthly expenses of: 3 |] ($1,800) for food and housekeeping supplies, ($600) for transportation (fuel, repairs, and 4 || maintenance), ($150) for entertainment, ($210) for clothing and laundry, ($367) for one car 5 || payment, and ($397) for phone, internet, and cable. Dckt. 1, p. 30-31. 6 Looking at Schedule D, Debtors list one creditor, Toyota Financial Services, whose 7 || ($15,640) claim is secured by Debtors’ 2020 Toyota Camry. Dckt. | at 17. The monthly payment 8 || for this claim is provided in Schedule J. 9 Debtors Can Fund a 90% Unsecured Dividend Plan 10 || Even If Their Monthly Net Income is Cut in Half 11 If serious income reductions hit Debtors and they had only 50% of Monthly Net Income, 12 || the Monthly Net Income as computed using Debtors’ Amended Schedule I, then Debtors would still 13 |] be able to fund a Plan with $1,185.00 a month. Over the term of a 60-month plan, monthly plan 14 || payments would generate $71,100.00 for administrative expenses and payment to creditors. After 15 || deducting ($5,119) for Chapter 13 Trustee fees (estimated at 7.2%) and administrative expenses and 16 || ($8,500) for Debtors’ counsel’s maximum set fee for which no fee application is required (assuming 17 || Debtors’ counsel concluded that such maximum fee was appropriate in such a bankruptcy), there 18 || $57,481.00 remaining to pay creditors who are owed ($63,315) in general unsecured claims. That 19 || would be a 90.73% general unsecured claim dividend - an almost unheard of large percentage in 20 || Chapter 13 cases. 21 As noted above, with Debtors’ actual projected disposable income of $2,371.00 a month, 22 || Debtors would be done with the Chapter 13 case and paying a 100% dividend to creditors with 23 || unsecured claims in less than three years. 24 Debtors Have Primarily Consumer Debts 25 Looking at Schedule F, the unsecured debt appears to be substantially consumer credit card 26 || debt (as opposed to medical expenses, failed business expenses, and the like). Debtors do list some 27 |) student loan debt, but those amounts total approximately $1,360.00 and date back to 2002 and 2004. 28 Looking at the pattern of conduct, it appears that Debtors may be establishing an eight-year

1 || Chapter 7 filing cycle, using the period between cases when obtaining a Chapter 7 discharge is 2 || barred to run up consumer debts and maintain a credit-funded lifestyle, which credit Debtors do not 3 || intend to repay. 4 Debtors’ Income is Almost That of The 5 || Median Income for a Family of Four in California 6 As the Debtors note, the median income for a family of four, as reported by the U.S. Trustee 7 || on its website, in California was $122,707.00 when this case was filed. On Amended Schedule I, 8 || Debtors’ combined monthly gross income is $9,692.00, which is $116,304.00 annually. While not 9 || quite $122,707.00, it is knocking on the door. Thus, while Debtors could possibly justify a three- 10 || year Chapter 13 Plan (see, 11 U.S.C. § 1325(b)(4) computation of applicable commitment period), 11 || that does not mean that $116,000.00 a year in income is irrelevant to a consideration of abuse. 12 The court notes that on the Debtors’ Chapter 7 Statement of Current Monthly Income (which 13 |] is an average computed from the six months preceding the filing of the bankruptcy case), Dckt. 1 14 || at 42-44, Debtors compute their currently monthly income for the year as $121,508.00, even higher 15 than that as based on Amended Schedule I. Debtors’ computation is 99.02% of the median income 16 || for a family of four. 17 || Congress Has Crafted Chapter 13 Relief For Debtors With Income Such as The 18 || Debtors in This Case 19 If determined to be abusing the extraordinary relief granted under Chapter 7, Debtors are not 20 || left without possible bankruptcy relief. Debtors can prosecute a Chapter 13 Plan. From their 21 || income, Debtors can spend whatever is reasonable and necessary for their family expenses. Then, 22 || only from what is left over after all expenses are provided for, will a Chapter 13 Plan be funded. 23 || If able to limit the Chapter 13 Plan to only three years based on Debtors’ income, it appears that 24 Debtors would still be able to fund a 100% Chapter 13 Plan (assuming that Debtors’ expense 25 || information, which appears to be realistically higher, is accurate). 26 Debtors’ argument (Opposition, p. 7:9-10; Dckt. 27) that if their disposable income was only 27 | $1,291.00 as projected by the U.S. Trustee, it would take them the extraordinary period of fifty (50) 28 || months to pay a 100% dividend to creditors with general unsecured claims, if Debtors did not 10

1 || qualify to have only a thirty-six (36) month Chapter 13 Plan. That fifty (50) months for a Chapter 2 || 13 Plan is not only less than the maximum period of a Chapter 13 Plan, but shows an extraordinary 3 || financial ability for a debtor. Rather than showing no abuse, that argument demonstrates how the 4 || use of Chapter 7 by these Debtors is an abuse of Chapter 7 of the Bankruptcy Code. 5 DECISION 6 The court begins with the plain language of the statute as enacted by Congress in 11 U.S.C. 7 || § 707(b)(1) and (b)(3)(B). Those provisions (stated above) provide that the totality of the 8 |] circumstances are considered when a presumption of abuse is not asserted. The fact that Debtors’ 9 || income is just one or two percentage points below creating such a presumption does not make that 10 || substantial income irrelevant. Additionally, it does not require the court to conclude that the Debtors 11 || filed the petition in bad faith. As the express language of 11 U.S.C. § 707(b)(3) requires, the court 12 || considers the “totality of the circumstances . . . of the debtor’s financial situation” in determining 13 || whether the Chapter 7 filing would be an abuse of the provisions of Chapter 7. 14 The Ninth Circuit Court of Appeals has addressed this totality of the circumstances for 15 || dismissal of a Chapter 7 case in Price v. United States Trustee (In re Price), 353 F.3d 1135 (9th Cir. 16 || 2003. This was prior to the 2005 amendment to 11 U.S.C. § 707, when there was no presumption 17 || of abuse and the conversion standard provided in then 11 U.S.C. § 707(b) that the United States 18 || Trustee must show that there was a “substantial abuse” of Chapter 7 by the debtor and for which 19 || there formerly was a statutory presumption of granting a debtor relief under Chapter 7. The 20 || provisions of 11 U.S.C. § 707, as amended have removed the requirement of “substantial abuse,” 21 || with 11 U.S.C. § 707(b)(1) and (b)(3) requiring just “abuse.” Additionally, the presumption in favor 22 || of granting a debtor relief under Chapter 7 has been deleted. These deletions were made as part of 23 || the 2005 BAPCPA amendments to the Bankruptcy Code. 24 In addressing the totality of the circumstances requirement for dismissal of a Chapter 7 case 25 || filed by a debtor under the higher “substantial abuse” standard and there was a presumption of 26 || granting Chapter 7 relief to a debtor, the Ninth Circuit Court of Appeals in Price stated a 27 || nonexclusive lists of examples and factors to be considered by the court: 28 The remaining substantive issue is whether Price meets the substantial abuse 11

1 standard of Section 707(b). The term "substantial abuse" is not defined in the Bankruptcy Code. Rather, courts have examined the totality of the circumstances in 2 determining whether substantial abuse exists in a particular case, utilizing criteria such as the following: 3 (1) Whether the debtor has a likelihood of sufficient future income to fund 4 a Chapter 11, 12, or 13 plan which would pay a substantial portion of the unsecured claims; 5 (2) Whether the debtor's petition was filed as a consequence of illness, 6 disability, unemployment, or some other calamity; 7 (3) Whether the schedules suggest the debtor obtained cash advancements and consumer goods on credit exceeding his or her ability to repay them; 8 (4) Whether the debtor's proposed family budget is excessive or extravagant; 9 (5) Whether the debtor's statement of income and expenses is 10 muisrepresentative of the debtor's financial condition; and 11 (6) Whether the debtor has engaged in eve-of-bankruptcy purchases. 12 3 Norton Bankruptcy Law and Practice 2d § 67:5, at 67-10 (William L. Norton, Jr. et al. eds., 1997). 13 The primary factor defining substantial abuse is the debtor's ability to pay his 14 debts as determined by the ability to fund a Chapter 13 plan. Thus, we have concluded that a "debtor's ability to pay his debts will, standing alone, justify a 15 section 707(b) dismissal." Kelly, 841 F.2d at 914. 16 || Price v. United States Trustee (In re Price), 353 F.3d at 1139-1140. 17 Here, Debtors have demonstrated that they have substantial monthly income and produce, 18 || after generous expenses, substantial monthly projected disposable income with which a Chapter 13 19 || Plan could be funded. This would result in a meaningful payment to creditors while Debtors could 20 || maintain their family lifestyle. 21 As the court computed above, if Debtors had only 50% of the projected disposable income 22 || (computed based on reduced Combined Monthly Income Amount stated on Amended Schedule I) 23 || to fund the plan with each month, that being “only” $1,185.00 a month, then a 60-month plan would 24 |) generate $71,100.00 for payment to creditors holding general unsecured claims. After deducting 25 ($5,119) for Chapter 13 Trustee fees and expenses (computed at 7.2%) and an additional ($8,500) 26 || for the maximum set fee compensation for Debtors’ counsel (assuming that he would charge such 27 || amount for a case like this) that would leave $57,481.00 to pay creditors with general unsecured 28 |) claims that total ($63,351). That would be a 90.73% general unsecured claim dividend - an almost 12

1 || unheard of number in Chapter 13 cases. 2 However, with Debtors’ actual Monthly Net Income of $2,371.00 a month (based on 3 | Amended Schedule I, Dckt. 34, and Schedule J, Dckt. 1), Debtors would be done with the 4 || Chapter 13 case and paying a 100% dividend to creditors with unsecured claims in less than three 5 || years.’ 6 Looking at Schedule F, the unsecured debt appears to be substantially consumer credit card 7 || debt (as opposed to medical expenses, failed business expenses, and the like). Debtors do list some 8 || student loan debt, but those amounts total approximately $1,360.00 and date back to 2002 and 2004. 9 Debtors do not assert in the Opposition or provide any evidence that their debts are not 10 || primarily consumer debts. Opposition, Declaration; Dckts. 27, 28. On the Bankruptcy Petition; 11 |] Part 6, Question 16; Debtors stated under penalty of perjury that their debts are primarily consumer 12 || debts. Dckt. 1 at 6. 13 For the two Debtors in this Bankruptcy Case, they have sufficient income to clearly provide 14 || for their family, with substantial expense cushions, and are able to pay their debts. They are not 15 || facing an extraordinary financial burden or had a financially catastrophic event (such as illness) 16 || dumped on them. Rather, from the evidence presented (including Debtors’ Schedules providing 17 || information under penalty of perjury), Debtors are facing the economic and legal reality of persons 18 || who have income and borrow money, and then who are then able to pay their debts. These are not 19 || debtors for whom Chapter 7 exists, and for these Debtors to use it under the totality of these 20 || circumstances, Debtors are abusing the provisions of Chapter 7. 21 It may be through a Chapter 13 Plan Debtors can discount the repayment of that debt - 22 || exchanging three to five years in a Chapter 13 case for such discount. That is some of the 23 || extraordinary relief that Congress gives under the Bankruptcy Code. But, given Debtors’ projected 24 || disposable income, Congress does not give Debtors the right to just take that income and walk away 25 26 > To “show the math” for this calculation, thirty-three monthly payments of $2,371 27 || generates $78,243 in funding for a Chapter 13 Plan. After deducting ($5,634) for Chapter 13 Trustee Fees and Expenses and ($8,500) for the set fees for Debtor’s counsel, that leaves 28 |] $64,109 in funds to pay the ($63,351) in general unsecured claims. 13

1 || from the debt. 2 The court concludes that under the totality of the circumstances, Debtors filing this Chapter 7 3 || case is an abuse of Chapter 7 of the Bankruptcy Code. Congress has provided protections to debtors 4 || such as these under Chapter 13 of the Bankruptcy Code. While using their income to fully pay the 5 || reasonable and necessary expenses for Debtors and Debtors’ dependants, it is only the projected 6 || disposable income that will be paid into the Plan for payment to creditors. 7 The Motion is granted and Debtors’ Chapter 7 is dismissed. 8 || Dated: January 09, 2024 By the Court 9 10 Qf]

Ronald H. Sargis, Judge 12 United’ States Bankruptcy Court 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

1 ° Instructions to Clerk of Court 2 Service List - Not Part of Order/Judgment 3 || The Clerk of Court is instructed to send the Order/Judgment or other court generated document transmitted herewith to the parties below. The Clerk of Court will send the document 4 || via the BNC or, if checked , via the U.S. mail. 5 Debtor(s) Attorney(s) for the Debtor(s) (if any) 6 7 ||| Bankruptcy Trustee (if appointed in the Office of the U.S. Trustee case) Robert T. Matsui United States Courthouse 8 Attn: Trevor Fehr, Esq. 501 I Street, Room 7-500 9 Sacramento, CA 95814 10 || | Attorney(s) for the Trustee (if any) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28