Friday, October 21, 2005

Dicta on Means Testing

In re Reeves, 327 B.R. 436 (Bankr. W.D. Mo. 2005) does not apply BAPCPA but does give a preview of the interrelation between pre-amendment "substantial abuse" law and BAPCPA "means testing." In Reeves, the court looked at (but found it unnecessary to decide) whether income of a non-filing spouse should be considered when determining whether granting relief to a debtor under Chapter 7 would be a substantial abuse. Most courts do find that the non-filing spouse's income must be considered.

The court suggested in a footnote that the question may be rendered moot under the amended provisions of 11 U.S.C. 707(b). Citing Brown & Ahern's 2005 Bankruptcy Reform Legislation With Analysis, Judge Dow noted their commentary that the definition of "current monthly income" for the new means test includes income of the debtor's spouse only in a joint case. If the definition is interpreted as precluding consideration of a spouse's income except in a joint case, this would actually mark a departure from existing practice which could make some individual debtors eligible for Chapter 7 (if they do not file jointly) whose cases would have been dismissed under the substantial abuse provisions of pre-amendment law.

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