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I have added the Mastermind post for using the Mastermind for marketing your bankruptcy practice. Please let me know if you have trouble accessing. The transcript is still to come.

Just wanted to let you know that the Masterminds are all up to date. Links to the latest sessions are here. Bankruptcy filings are up and on the rise! If you'd like to get back into the Masterminds click on one of the sign up links. We'd love to have you back! Ron Drescher

A member of the Mastermind recently asked: Q. It would be helpful if you would teach us about how to respond to a UST statement of presumed abuse in chapter 7 cases

A. Regarding the UST Statement of presumed abuse, I typically don’t fight the US Trustee. The only time I will do that is if there’s a particularly sympathetic story to tell, or I’m willing to fight about whether a particular “tipping point” debt is consumer or non-consumer.

Also, the statute is clear about the kind of special circumstance needed to overcome the presumption of abuse:

(i)In any proceeding brought under this subsection, the presumption of abuse may only be rebutted by demonstrating special circumstances, such as a serious medical condition or a call or order to active duty in the Armed Forces, to the extent such special circumstances that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.

See Section 707(b)(2)(B).

Remember: the debtor’s attorney is on the hook for the cost of the US Trustee filing a successful motion to dismiss:

(A)The court, on its own initiative or on the motion of a party in interest, in accordance with the procedures described in rule 9011 of the Federal Rules of Bankruptcy Procedure, may order the attorney for the debtor to reimburse the trustee for all reasonable costs in prosecuting a motion filed under section 707(b), including reasonable attorneys’ fees, if— (i)a trustee files a motion for dismissal or conversion under this subsection; and (ii)the court— (I)grants such motion; and (II)finds that the action of the attorney for the debtor in filing a case under this chapter violated rule 9011 of the Federal Rules of Bankruptcy Procedure.

See Section 707(b)(4).

Cases where a debtor overcomes the presumption typically involve fairly dire medical circumstances for a debtor or their dependent. For example, in the case of In re Miller, 2022 Bankr. LEXIS 1382 (Bankr. MD Fl 2022), the debtor was able to overcome a presumption of abuse by showing that he had significant expenses related to the care of his disabled son, which included the cost of his medical care. The court found that these expenses were necessary and reasonable, and therefore, the debtor's disposable income was not available to pay her creditors.

These cases illustrate that debtors may be able to overcome a presumption of abuse by presenting evidence of special circumstances or necessary expenses that justify their income and expenses. However, each case is fact-specific, and the outcome will depend on the unique circumstances of the debtor's situation.

The difficulty in overcoming the presumption of abuse generally drives me to either (a) see if I can persuade the US Trustee to not make the presumption by alerting them that there’s a high income case being filed and having the discussion even before the 341 or (b) just filing a Chapter 13.

Q: Hope all is well! I just wanted to confirm with you that HOA fees are dischargeable in a chapter 7. I have a potential client who thought his HOA fees were included in his mortgage payment but they were not and he owes $8k in HOA fees and is retired and on a limited income. I think they can be discharged but I wanted to confirm.

A: HOAs are sticky because it’s clear from Section 523(a)(16) that while pre-petition HOA dues are dischargeable, the post-petition HOA dues are not:

(16) for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;

So as long as the client is able to pay the HOA dues that arise post-petition he should be ok, but you should check to make sure that the HOA dues have not become a lien in the property.

Hello! Customerhub has created this new "Post"feature that we can use to post messages to all or part of our Complete Bankruptcy community. I'm going to post when I'm online, new updates to the course, interesting questions from the members and other useful information. As a great bonus you'll be able to comment on the posts! So I'll get the ball rolling in the next post featuring an interesting question just posed by a member of the Mastermind. Stay tuned! Ron Drescher