Case Summary:
After the United States Trustee (UST) moved to dismiss the debtor's chapter 7 case on the grounds that there was a presumption of abuse under 11 U.S.C. § 707(b), the debtor amended his schedules to include a $425,088.66 non-consumer debt owed to the SBA Disaster Loan Servicing Center. The SBA Debt was based on a guarantee signed by the debtor's non-filing spouse for a loan related to her insurance business. With the additional obligation added to his scheduled debts, the debtor certified that his debts were not primarily consumer debts and he was not subject to any presumption of abuse in § 707(b). The UST then argued that neither the debtor nor his property were liable for the SBA Debt because the debtor's non-filing spouse received a chapter 7 discharge in late 2023. Although the debtor did not sign the SBA loan documents, he argued that he and/or his property were liable for the debt under Wisconsin law. The Court concluded that the debtor was not personally liable to the SBA because he did not sign or otherwise agree to be bound by the loan documents evidencing the SBA Debt and no other statute or law made him personally liable for the debt; the debtor's individual property could not be used to satisfy the SBA Debt because he was not an incurring or obligated spouse; and the debtor's marital property could not be used to satisfy the SBA Debt because the discharge injunction entered in his non-filing spouse's case prevented collection of the SBA Debt from the couple's marital property. Because the SBA did not have a right to payment from the debtor or any of his property, the SBA did not have a claim in the debtor's case and the SBA Debt was not properly included on the debtor's schedules. Without the SBA Debt, the debtor's debts were “primarily consumer debts,” and the debtor was subject to the requirements of § 707(b).

Statute/Rule References:
11 U.S.C. § 541(a)(2)
11 U.S.C. § 707(b)
Wis. Stat. § 766.55

Key Terms:
Motion to Dismiss
Primarily Consumer Debts
Marital Property Act