Case Summary:
Attorney who had represented the debtor in a pre-petition state court action filed an adversary proceeding, contending that his law firm’s claim for attorney’s fees was nondischargeable under § 523(a)(2)(A). The attorney argued that he had relied upon the debtor’s fraudulent representation, made approximately two years prior to the petition date, that he would not file for bankruptcy protection. The creditor also argued that the debtor had improperly prepared his means test form, and that the case should be dismissed under § 707(b)(2). The Court first considered the request that the case be dismissed for “presumed abuse” under § 707(b)(2) and concluded that the motion was untimely. Even had it been filed in a timely fashion, there was no substantive basis for dismissal of the case. The plaintiff argued that the debtor should have included his girlfriend’s income in the calculation of his current monthly income for purposes of the means test, but even if the debtor had done so, he would have been entitled to increase his household size, which would still mean that the debtor was below-median income and the case could not be presumed abusive. As for the fraud claims, the Court concluded that even if the debtor did promise not to file bankruptcy, the plaintiff did not demonstrate that the debtor acted with fraudulent intent or that the plaintiff justifiably relied upon the promise. Consequently, the Court granted judgment in favor of the debtor and awarded attorney’s fees to the debtor as the complaint was not “substantially justified.”

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 707 -- Dismissal
11 U.S.C. § 727(d) -- Discharge - Revocation

Key Terms:
Discharge - Revocation
Dismissal (Presumption of Abuse)
Fraud