David L. Mansfield

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
GREENVILLE DIVISION
IN RE:
DAVID L. MANSFIELD,
Debtor
CHAPTER 7
CASE NO. 11-06867-8-RDD
ORDER GRANTING MOTION TO
DISMISS CHAPTER 7 PROCEEDING
Pending before the Court is the Motion to Dismiss Chapter 7 Proceeding Pursuant to 11
U.S.C. § 707(b)(1) and (b)(3) (the “Motion”) filed by the Bankruptcy Administrator on November
15, 2011 and the Response to Motion to Dismiss filed by David L. Mansfield on December 23, 2011
(the “Response”). The Court conducted a hearing on February 13, 2012 in Wilson, North Carolina
to consider the Motion and the Response.
BACKGROUND
David L. Mansfield (the “Debtor”) filed a voluntary petition for relief pursuant to Chapter
7 of the United States Bankruptcy Code (the “Code”) on September 8, 2011. As part of his petition,
the Debtor filed his Schedules, Official Form B22A-Chapter 7 Statement of Current Monthly Income
& Means Test (“Form B22A”), and his Statement of Financial Affairs. The Debtor’s household
SO ORDERED.
SIGNED this 24 day of February, 2012.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
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current monthly income includes the income of his non-filing spouse. The Debtor indicated on Form
B22A that based on the initial calculation of his current monthly income a presumption of abuse did
not arise.1
After review of all the materials provided by the Debtor, the Bankruptcy Administrator
requested the Clerk of Court issue a notice of presumed abuse on October 24, 2011. Pursuant to 11
U.S.C. § 704(b)(2), the Statement of Presumed abuse was subsequently docketed by the Clerk of
Court on October 25, 2011.
In response to the Bankruptcy Administrator’s Motion, the Debtor filed the Response and
amendments to Schedule I, Schedule J, and Form B22A on December 23, 2011. The amended Form
B22A reflects that a presumption of abuse arises in the Debtor’s case.
The Motion seeks to dismiss the Debtor’s Chapter 7 case under 11 U.S.C. § 707(b)(1) based
on abuse of the provisions of Chapter 7. The Bankruptcy Administrator asserts the presumption of
abuse arises under § 707(b)(2) of the Code based on the Debtor’s disposable income calculations.
The Bankruptcy Administrator asserts that the Debtor overstated deductions to the household current
monthly income for food and clothing as well as a monthly mortgage payment, neither of which
were substantiated by Schedule J of the petition. The Bankruptcy Administrator also alleges the2
Debtor understated the amount deducted for transportation expenses and failed to include taxes paid
by his non-filing spouse in completion of Form B22A.3
The Debtor’s disposable income on the original Form B22A is $187.90 per month, or	1
$11,274.00 over 60 months, which is less than the statutory $11,725.00 threshold for the
presumption of abuse to arise pursuant to 11 U.S.C. § 707(b)(2).
Lines 39 and 42 of Form 22B.	2
Lines 22A and 25 of Form 22B.	3
2
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Furthermore, notwithstanding the presumption of abuse, the Bankruptcy Administrator
asserts that the totality of the Debtor’s financial circumstances demonstrate abuse and the case
should be dismissed pursuant to §707(b)(3).
In the Response, the Debtor asserts that based on the totality of the circumstances, he has not
demonstrated abuse. The Debtor testified he is a correctional officer with the North Carolina
Department of Corrections and commutes thirty (30) miles each way to work at Pasquotank
Correctional Institution in Elizabeth City, North Carolina. The Debtor asserts this commute, when
calculated at the Internal Revenue Service reimbursement rate of 55.5¢ per mile, is an $859.14 out
of pocket expense he must incur each month. The Debtor argues that his disposable income is less
than $500.00 each month and that after the Debtor’s normal and reasonable expenses he is left with
no significant disposable income for repayment of his debts. Therefore, the Debtor argues no abuse
exists.
DISCUSSION
I. Presumption of Abuse
The bankruptcy court may dismiss a case filed by an individual debtor or, with the debtor’s
consent, convert a case to a case under Chapter 11 or 13 if the court “finds that the granting of relief
would be an abuse of the provisions of [Chapter 7].” 11 U.S.C. § 707(b)(1). The Code provides that
a court should presume an abuse exists if the debtor’s [current monthly income]
reduced by certain amounts and multiplied by 60 is not less than the lesser of “(I) 25
percent of the debtor’s nonpriority unsecured claims in the case, or $7,025,
whichever is greater; or (II) $11,725.”
In re Leggett, No. 10-03383-8-RDD, 2011 WL 802806 *2 (Bankr. E.D.N.C. Mar. 2, 2011) (quoting
11 U.S.C. § 707(b)(2)(A)(i)).
3
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The Debtor has $72,304.93 in nonpriority unsecured claims listed in Schedule F. Twenty-
five percent of those claims equals $18,076.23. Therefore, because $11,725.00 is less than one
quarter of the Debtor’s nonpriority unsecured claims, the Debtor’s disposable income (current
monthly income reduced by allowed deductions) multiplied by 60 must be less than $11,725.00.
Amended Form B22A lists the Debtor’s monthly net or disposable income as $731.36. Over 60
months, the Debtor has $43,881.60 in disposable income. This amount is greater than $11,725.00,4
therefore, the presumption of abuse arises in the Debtor’s case.
The Bankruptcy Administrator’s motion asserts the presumption of abuse exists and the
Debtor understated and overstated certain deductions in the calculations on Form B22A. The
Bankruptcy Administrator points out that Form B22A lists expenses for additional food and clothing
of $42.00, which are not substantiated by Schedule J. In the Debtor’s Amended Schedule J,
expenses for food are increased from $250.00 to $500.00 and clothing is increased from $50.00 to
$100.00. Form B22A also lists a mortgage payment of $2,116.67 to Branch Banking & Trust
(“BB&T”), which is also not substantiated by Schedule J. In the amended Form B22A, the mortgage
payment to BB&T was decreased to $765.62, which matches Schedule J. The amended Form B22A
also appears to account for the Bankruptcy Administrator’s other objections such as the failure to
reflect the non-filing spouse’s tax liabilities and accounting for overwithholding of taxes, as tax
expenses increased from $746.84 in the original Form B22A to $1,417.56 in the amended Form
B22A. Thus, it appears the Debtor’s amendments to Form B22A and Schedule J address the
Bankruptcy Administrator’s concerns with the deduction of expenses.
For comparison purposes, the Court notes the Debtor’s disposable income in Form B22A	4
differs from his disposable income of $497.65 listed in Schedule J. However, disposable income
of $497.65 over 60 months amounts to $29,859.00, which is still greater than $11,725.00.
4
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II. Special Circumstances to Rebut the Presumption of Abuse
Once the presumption of abuse under § 707(b)(2) arises, a debtor may only rebut the
presumption “by demonstrating special circumstances, such as a serious medical condition or a call
or order to active duty in the Armed Forces.” 11 U.S.C. § 707(b)(2)(B)(i). Special circumstances
are not limited to those stated in § 707(b)(2)(B)(i). However, the circumstances must “justify
additional expenses or adjustments of current monthly income for which there is no reasonable
alternative.” Id. Additionally, the determination of special circumstances may “be made on a case-
by-case basis, and decided upon each debtor’s individual circumstances.” In re Siler, 426 B.R. 167,
173 (Bankr. W.D.N.C. 2010).
The debtor bears the “procedural and substantive burden to show the special circumstances
which rebut the presumption of abuse.” In re Hammock, 436 B.R. 343, 352 (Bankr. E.D.N.C. 2010)
(citing In re Fonash, 401 B.R, 143, 147 (Bankr. M.D. Pa. 2008)). To meet the procedural
requirements under § 707(b)(2)(B)(ii), a debtor must provide documentation for the expenses and
a detailed explanation of the special circumstances making such expenses necessary and reasonable.
Id.
In the present case, the Debtor’s amended Form B22A indicates additional expense claims
of $612.00 each month. The Debtor argues his transportation expenses to and from work constitute5
a special circumstance that rebuts the presumption of abuse. The Debtor testified he drives thirty
miles (30) each way from his home in Tyner, North Carolina to Elizabeth City, North Carolina for
The Debtor’s additional expense claims consist of: 1) $371.00 for costs of transportation	5
for work; 2) $125.00 for homeowner’s insurance; and 3) $116.00 for property taxes. The Debtor
did not argue that the property taxes and homeowner’s insurance constituted a special
circumstance. The Court notes that the Debtor’s Schedule J budgets $151.00 each month for real
and personal property taxes and states that property insurance is included in the monthly
mortgage payment. As such, property taxes and homeowner’s insurance are already accounted
for in the Debtor’s expenses.
5
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his full-time job as a corrections officer and a part-time job at a golf-course. The Debtor testified
his vehicle, a 2007 Chevrolet truck, gets approximately twenty-two (22) miles per gallon on the
highway and eighteen (18) miles per gallon in the city. The Debtor testified he uses the excess
disposable income each month for fuel and maintenance of his vehicle. Thus, because his livelihood
requires him to travel to and from work, the Debtor argues his daily commute is a special
circumstance that justifies the additional expense.
The Court finds the Debtor’s daily commute is not a special circumstance justifying
additional expenses and therefore does not rebut the presumption of abuse pursuant to § 707(b)(2).
The Debtor testified that he has been employed at Pasquotank Correctional Institution in Elizabeth
City, North Carolina for more than ten (10) years. The Debtor stated he has lived more than thirty
(30) miles from the prison the entire time that he has worked there and that he purchased his 2007
Chevrolet truck five (5) years ago. The Debtor testified that at the time he purchased the truck he
did not consider purchasing a more economical vehicle and stated a truck was necessary for
maintenance of his home and yard. However, the Debtor did not testify of a need for a truck in
connection to the purported special circumstance, in this case, his commute to work. Thus, because
a more fuel efficient vehicle could be used for the Debtor’s commute, the Court finds there are more
reasonable alternatives to the Debtor’s current mode of transportation that would reduce his
expenses.
While courts have found special circumstances can include “high commuting costs [or] the
increased price of gas,” those cases differ factually from the present case. Collier on Bankruptcy6
The court in In re Batzkiel, 349 B.R. 581 (Bankr. N.D. Iowa 2006) found the situation	6
where debtors each commuted over 40 miles each way through high deer populated rural areas
and were at risk of losing their automotive insurance coverage should they make a claim for
another collision with a deer constituted special circumstances for allowing additional expenses
of maintaining a spare vehicle. In the present case, the Debtor only argues that his commute of 30
miles each way, with no other evidence, constitutes special circumstances.
6
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¶ 707.04[3][d] (Alan. N. Resnick & Henry J. Sommer eds., 16th ed.). In fact, many courts have
found transportation expenses for a debtor’s commute are insufficient to constitute special
circumstances. See In re Tranmer, 355 B.R. 234, 250 (Bankr. D. Mont. 2006) (finding high
transportation costs for debtor’s commute was not a special circumstance); In re Sadler, 378 B.R.
780, 787 (Bankr. E.D. Tex. 2007) (finding debtors failed to prove costs of commuting were special
circumstances).
Furthermore, the Debtor testified he calculated the monthly fuel expenses by multiplying his
estimated mileage by the 55.5¢ rate provided by the Internal Revenue Service. However, the Debtor
testified this may not be equal to his actual monthly commuting expenses. The Debtor’s evidence
did not include an itemized account for each additional expense to prove special circumstances exist.
Therefore, the Debtor has not met the procedural burden of proving a special circumstance pursuant
to § 707(b)(2)(B)(i).
The Court finds the presumption of abuse arises pursuant to § 707(b)(2) where the Debtor’s
60-month disposable income of $43,881.60 exceeds $11,725.00 and that the Debtor failed to meet
the burden of proving special circumstances exist to rebut the presumption of abuse. Therefore, the7
Motion is GRANTED. However, the Debtor shall have twenty (20) days from the entry of this order
to convert the case to a case under Chapter 13. Should the Debtor fail to convert the case within
twenty (20) days, the case is DISMISSED pursuant to § 707(b)(1).
SO ORDERED.
END OF DOCUMENT
Because the presumption of abuse is established under § 707(b)(2) and the Debtor has	7
failed to prove special circumstances rebutting the presumption, the evidence in this case
establishes abuse pursuant to § 707(b)(1). Therefore, it is not necessary for the Court to consider
whether abuse exists under § 707(b)(3).
7
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