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Bankruptcy court sides with debtor

On Behalf of | Jul 12, 2017 | Bankruptcy

A Virginia man who filed for Chapter 7 bankruptcy separately from his wife received a positive ruling from his district’s bankruptcy court. The trustee in his case had challenged the fact that he was maintaining two homes while trying to discharge debts. The trustee declared that the debtor should sell one home instead of seeking relief through bankruptcy. The court, however, deemed his expenses to be valid and not an abuse of the Bankruptcy Code.

The judge decided that the man had not taken unfair advantage of his creditors. The court’s analysis of his living expenses did not produce evidence of a reckless or lavish lifestyle. The fact that he maintained two homes did not in itself show an abuse of the law. The court even considered that he could have provided payments in some form to creditors if he had filed instead for Chapter 13. The court, however, did not consider his choice to file through Chapter 7 abusive either.

The sources of the man’s financial distress had been the two mortgages on one home and $60,000 in student loan debt. His wife then purchased an additional home when she needed a larger residence to accommodate her 72-year-old mother who had to move in with the family because of dementia.

Each bankruptcy case presents a court with unique financial circumstances to consider. Someone feeling the pressure of financial hardship could talk to an attorney about how to address problems like repossession, foreclosure or wage garnishment. Relief from overwhelming debt might be possible if an attorney determines that the client qualifies for Chapter 7.