Case Summary:
The United States Trustee moved to dismiss Debtor Kelly Lynn Peterman’s Chapter 7 case under section 707(b)(3), arguing that the totality of his financial circumstances demonstrated abuse. The Debtor owned a sport boat and had an above-median annual household income. The UST argued that the boat was unnecessary luxury collateral, and that his income was high enough to fund a Chapter 13 plan that would substantially repay his creditors. In response, the Debtor argued that he used the boat as part of a seasonal dock cleaning business, and that he was facing significant upcoming expenses and income adjustments that would diminish the return that he could pay his creditors. After an evidentiary hearing, the Court agreed with the Debtor and denied the UST’s motion. The evidence showed that the boat was used in the business and that the Debtor recently experienced a reduction in income. He also had several significant upcoming expenses, including two surgeries. As a result, the UST could not show, by a preponderance of the evidence, that the Debtor’s financial circumstances demonstrated abuse, and the case was allowed to continue.

Statute/Rule References:
11 U.S.C. § 707(b)(3) -- Dismissal

Key Terms:
Dismissal (for abuse/totality of the circumstances)
Luxury Collateral