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§ Sec.
707. Dismissal
of a case or conversion to a case under chapter
11 or 13 
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(a) The court may dismiss a case
under this chapter only
after notice
and a hearing and only for cause, including—
(1) unreasonable
delay by the
debtor
that is prejudicial to
creditors;
(2) nonpayment
of any fees or charges required under chapter 123 of title
28; and
(3) failure of
the
debtor
in a voluntary case to file, within fifteen days or such additional
time as the court may allow after the filing of the petition commencing
such case, the information required by paragraph
(1) of
section
521(a),
but only on a motion by the
United States
Trustee.
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(b)(1)
After notice
and a hearing, the court, on its own motion or on a motion by the
United States
Trustee, but not at the request or
suggestion of Trustee (or bankruptcy
administrator, if any), or
any party in 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
to a case under chapter
11
or
13 of this title,
if it finds that the granting of relief would be an
substantial
abuse
of the provisions of this chapter.
There
shall be a presumption in favor of granting the relief requested by
the debtor.
In making a determination 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 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 is defined in section
548(d)(4)).
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(2)(A)(i)
In considering under paragraph
(1) whether the granting of relief
would be an abuse of the provisions of this chapter, the court shall
presume abuse exists if the
debtor's
current monthly income reduced by the
amounts determined under clauses
(ii),
(iii), and
(iv), and
multiplied by 60 is not less than the lesser of—
(I) 25 percent of the
debtor's nonpriority unsecured
claims in the
case, or $7,475,
whichever is greater; or
(II) $11,725.

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(ii)(I) The
debtor's monthly expenses shall be
the
debtor's applicable monthly expense
amounts specified under the National Standards and Local Standards,
and the
debtor's actual monthly expenses for
the categories specified as Other Necessary Expenses issued by the Internal
Revenue Service for the area in which the
debtor resides, as in effect on the
date of the entry of the
order for relief,
for the
debtor, the
dependents of the
debtor, and the spouse of the
debtor in a joint case, if the spouse
is not otherwise a
dependent. Such expenses shall include
reasonably necessary health insurance, disability insurance, and health
savings account expenses for the
debtor, the spouse of the
debtor, or the
dependents of the
debtor. Notwithstanding any other provision
of this clause, the monthly expenses of the
debtor shall not include any payments
for
debts. In addition,
the
debtor's monthly expenses shall include
the
debtor's reasonably necessary expenses
incurred to maintain the safety of the
debtor and the family of the
debtor from family violence as identified
under section 30 92
of the Family Violence Prevention and Services Act,
or other applicable Federal law. The expenses included in the
debtor's monthly expenses described
in the preceding sentence shall be kept confidential by the court. In
addition, if it is demonstrated that it is reasonable and necessary,
the
debtor's monthly expenses may also
include an additional allowance for food and clothing of up to 5 percent
of the food and clothing categories as specified by the National Standards
issued by the Internal Revenue Service.
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(II) In addition, the
debtor's monthly expenses may include,
if applicable, the continuation of actual expenses paid by the
debtor's that are reasonable and necessary
for care and support of an elderly, chronically ill, or disabled household
member or member of the
debtor's immediate family (including
parents, grandparents, siblings, children and grandchildren of the
debtor, the
dependent of the
debtor, and the spouse of the
debtor in a joint case who is not a
dependent) and who is unable to pay
for such reasonable and necessary expenses.
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(III) In addition, for a
debtor eligible for chapter
13,
the
debtor's monthly expenses may include
the actual administrative expenses of administering a chapter
13
plan for the district in which the
debtor resides,
up to an amount of 10 percent of the projected plan payments, as determined
under schedules issued by the Executive Office for
United States Trustees.
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(IV) In addition, the
debtor's monthly expenses may include
the actual expenses for each
dependent child under
the age of 18 years up to $1,875
per year per child to attend a private or public
elementary or secondary school, if the
debtor provides documentation of such
expenses and a detailed explanation of why such expenses are reasonable
and necessary, and why such expenses are not already accounted for in
the National Standards, Local Standards, or Other Necessary Expenses
referred to in subclause
(I).
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(V) In addition, the
debtor's monthly expenses may include
an allowance for housing and utilities, in excess of the allowance specified
by the Local Standards for housing and utilities issued by the Internal
Revenue Service, based on the actual expenses for home energy costs
if the
debtor provides documentation of such
actual expenses and demonstrates that such actual expenses are reasonable
and necessary.
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(iii) The
debtor's average monthly payments on
account of secured
debts shall be
calculated as the sum of—
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(I) the total of all amounts scheduled
as contractually due to secured
creditors in each month of the 60 months
following the date of the filing
of the petition; and
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(II) any additional payments to
secured
creditors necessary for the
debtor, in filing a plan under chapter
13 of this title, to maintain possession
of the
debtor's primary residence, motor vehicle,
or other property necessary for the support of the
debtor and the
debtor's
dependents, that serves as collateral
for secured
debts;
divided by 60.
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(iv) The
debtor's expenses for payment of all
priority
claims (including
priority child support and alimony
claims) shall
be calculated as the total amount of
debts entitled
to priority; divided by 60.
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(B)(i) In any proceeding brought
under this subsection, the presumption of abuse may only be rebutted
by demonstrating special circumstances that justify additional expenses
or adjustments of
current monthly income for which there
is no reasonable alternative.
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(ii) In order to establish special
circumstances, the
debtor shall be required to itemize
each additional expense or adjustment of income and provide—
(I) documentation for such expense
or adjustment to income; and
(II) a detailed explanation of
the special circumstances that make such expenses or adjustment to income
necessary and reasonable.
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(iii) The
debtor shall attest under oath to
the accuracy of any information provided to demonstrate that
additional expenses or adjustments to income are required.
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(iv) The presumption of abuse may
only be rebutted if the additional expenses or adjustments to income
referred to in clause
(i) cause the product of the
debtor's
current monthly income reduced by the
amounts determined under clauses
(ii),
(iii), and
(iv) of subparagraph
(A) when multiplied
by 60 to be less than the lesser of—
(I) 25 percent of the
debtor's nonpriority unsecured
claims, or $7,475,
whichever is greater; or
(II) $11,725.

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(C) As part of the schedule of
current income and expenditures required under section
521, the
debtor shall include a statement of
the
debtor's
current monthly income, and the calculations
that determine whether a presumption arises under subparagraph
(A)(i), that
shows how each such amount is calculated.
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(D) Subparagraphs
(A) through
(C) shall not
apply, and the court
may not dismiss or convert a case based
on any form of means testing, if the debtor is a disabled veteran (as
defined in section 3741(1) of title 38), and the indebtedness occurred
primarily during a period during which he or she was—
(i) on active duty (as defined
in section 101(d)(1) of title 10); or
(ii) performing a homeland defense
activity (as defined in section 901(1) of title 32).
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(D)
Subparagraphs
(A) through
(C) shall not
apply, and the court
may not dismiss or convert a case based
on any form of means testing,—
(i) if the debtor is a disabled veteran (as
defined in section 3741(1) of title 38), and the indebtedness occurred
primarily during a period during which he or she was—
(i)(I) on active duty (as defined
in section 101(d)(1) of title 10); or
(ii)(II) performing a homeland defense
activity (as defined in section 901(1) of title 32);
or
(ii) with
respect to the debtor, while the debtor is—
(I) on,
and during the 540-day period beginning immediately after the debtor
is released from, a period of active duty (as defined in section
101(d)(1) of title 10) of not less than 90 days; or
(II)
performing, and during the 540-day period beginning immediately
after the debtor is no longer performing, a homeland defense
activity (as defined in section 901(1) of title 32) performed for a
period of not less than 90 days;
if after September 11, 2001, the debtor while
a member of a reserve component of the Armed Forces or a member of
the National Guard, was called to such active duty or performed such
homeland defense activity.
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(3)
In considering under paragraph
(1) whether the granting of relief
would be an abuse of the provisions of this chapter in a case in which
the presumption in
subparagraph
(2)(A)(i)
of such paragraph
does not apply
or has been rebutted, the court shall consider—
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(A) whether the
debtor filed the petition in bad faith;
or
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(B) the totality of the circumstances
(including whether the
debtor seeks to reject a personal services
contract and the financial need for such rejection as sought by the
debtor) of the
debtor's financial situation demonstrates
abuse.
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(4)(A)
The court, on its own initiative or on the motion of a party in interest,
in accordance with the procedures described in rule
9011 of the Federal Rules of
Bankruptcy
Procedure, may order the
attorney for the
debtor to reimburse the Trustee for
all reasonable costs in prosecuting a motion filed under section
707(b), including
reasonable attorneys’ fees, if—
(i) a Trustee files a motion for
dismissal or conversion under this subsection; and
(ii) the court—
(I) grants that motion; and
(II) finds that the action of the
counsel for the
debtor in filing under this chapter
violated rule
9011 of the Federal Rules of
Bankruptcy
Procedure.
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(B) If the court finds that the
attorney for the
debtor violated rule
9011 of the Federal Rules of
Bankruptcy
Procedure, the court, on its own initiative or on the motion of a party
in interest, in accordance with such procedures, may order—
(i) the assessment of an appropriate
civil penalty against the
attorney for the
debtor; and
(ii) the payment of such civil
penalty to the Trustee, the
United States Trustee (or the bankruptcy
administrator, if any).
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(C) The signature of an
attorney on a petition, pleading, or
written motion shall constitute a certification that the
attorney has—
(i) performed a reasonable investigation
into the circumstances that gave rise to the petition, pleading or written
motion; and
(ii) determined that the petition,
pleading, or written motion—
(I) is well grounded in fact; and
(II) is warranted by existing law
or a good faith argument for the extension, modification, or reversal
of existing law and does not constitute an abuse under paragraph
(1).
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(D) The signature of an
attorney on the petition shall constitute
a certification that the
attorney has no knowledge after an
inquiry that the information in the schedules filed with such petition
is incorrect.
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(5)(A)
Except as provided in subparagraph
(B) and subject
to paragraph
(6),
the court, on its own initiative or on the motion of a party in interest,
in accordance with the procedures described in rule
9011 of the Federal Rules of
Bankruptcy
Procedure, may award a
debtor all reasonable costs (including
reasonable attorneys’ fees) in contesting a motion filed by a party
in interest (other than a Trustee or
United States Trustee (or bankruptcy
administrator, if any)) under this subsection if—
(i) the court does not grant the
motion; and
(ii) the court finds that—
(I) the position of the party that
brought the motion violated rule
9011 of the Federal Rules of
Bankruptcy
Procedure; or
(II) the
attorney (if any) who filed the motion
did not comply with the requirements of clauses
(i) and
(ii) of paragraph
(4)(C), and the
motion was made solely for the purpose of coercing a
debtor into waiving a right guaranteed
to the
debtor under this title.
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(B) A small business that has a
claim of an aggregate
amount less than $1,175
shall not be subject to subparagraph
(A)(ii)(I).
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(C) For purposes of this paragraph—
(i) the term “small business”
means an unincorporated business, partnership,
corporation,
association or organization that—
(I) has fewer than 25 full-time
employees as determined on the date on which the motion is filed; and
(II) is engaged in commercial or
business activity; and
(ii) the number of employees of
a wholly owned subsidiary of a
corporation
includes the employees of—
(I) a parent
corporation;
and
(II) any other subsidiary
corporation of
the parent
corporation.
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(6)
Only the judge or
United States Trustee (or bankruptcy
administrator, if any) may file a motion under section
707(b), if the
current monthly income of the
debtor, or in a joint case, the
debtor and the
debtor's spouse, as of the date of
the
order for relief,
when multiplied by 12, is equal to or less than—
(A) in the case of a
debtor in a household of 1
person, the
median family income of the applicable
State for 1 earner;
(B) in the case of a
debtor in a household of 2, 3, or 4
individuals, the highest
median family income of the applicable
State for a family
of the same number or fewer individuals; or
(C) in the case of a
debtor in a household exceeding 4 individuals,
the highest
median family income of the applicable
State for a family of 4 or fewer
individuals, plus $675
per month for each individual in
excess of 4.
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(7)(A)
No judge,
United States Trustee (or bankruptcy
administrator, if any), Trustee, or other party in interest may file
a motion under paragraph
(2) if the
current monthly income of the
debtor and the
debtor's spouse combined, as of the
date of the
order for relief
when multiplied by 12, is equal to or less than—
(i) in the case of a
debtor in a household of 1
person, the
median family income of the applicable
State for 1 earner;
(ii) in the case of a
debtor in a household of 2, 3 or 4
individuals, the highest
median family income of the applicable
State for a family
of the same number or fewer individuals; or
(iii) in the case of a
debtor in a household exceeding 4 individuals,
the highest
median family income of the applicable
State for a family of 4 or fewer
individuals, plus $675
per month for each individual in
excess of 4.
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(c)(1)
In this subsection—
(A) the term “crime of
violence”
has the meaning given that term in section 16 of title
18; and
(B) the term “drug
trafficking crime” has the meaning given that term in section
924(c)(2) of title
18.
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(2) Except as provided in paragraph
(3),
after notice and a hearing, the court,
on a motion by the victim of a crime of violence or a drug trafficking
crime, may when it is in the best interest of the victims dismiss a
voluntary case filed by an individual
debtor under this chapter if that individual
was convicted of that crime.
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(Pub. L.
95-598, Nov. 6, 1978, 92 Stat. 2606; Pub. L. 98-353, title III,
§ 312, 475, July 10, 1984, 98 Stat. 355, 381; Pub. L. 99-554,
title II, § 219, Oct. 27, 1986, 100 Stat. 3100; Pub. L. 105-183,
§ 4(b), June 19, 1998, 112 Stat. 518; Pub. L.
109-8, Title I, § 102(a),
(f), April 20, 2005, 119 Stat. 27, 33; Feb. 14, 2007,
72 Fed. Reg. 7082; Pub. L.
110-438, § 2, Oct. 20, 2008, 122 Stat. 5000; Feb. 25,
2010, 75 Fed. Reg. 8747; Pub. L.
111–320, title II, § 202(a), Dec. 20, 2010, 124 Stat.
3509; Pub. L.
111-327, § 2(a)(25), Dec. 22, 2010, 124 Stat.
3560; Feb. 21, 2013, 78 Fed. Reg.
12089.)
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©2005-2013 - WEBER LAW FIRM, P.C. - All
Rights Reserved
Page Last Updated:
June 17, 2013
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