In re: Barbara J. Rothermel

*The appellee did not file a response brief within the time required under FED. R.
A PP. P. 31(a). We ordered her to show cause why this appeal should not be submitted
without the filing of her brief and without oral argument, but she did not respond. Thus, the
appeal is submitted on the appellant’s brief and the record. See FED. R. A PP. P. 34(a)(2); CIR.
R. 31(d).
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted April 16, 2008 *
Decided April 17, 2008
Before
FRANK H. EASTERBROOK, Chief Judge
DIANE P. WOOD, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
No. 07‐3799
In the Matter of:
BARBARA J. ROTHERMEL,
Debtor‐Appellee.
Appeal of:
KENNETH L. WRONKE.
Appeal from the United States District
Court for the Central District of Illinois.
07 C 2160
Michael P. McCuskey,
Chief Judge.
O R D E R
Barbara Rothermel petitioned for a discharge of her debts under Chapter 7 of the
Bankruptcy Code. One of her creditors, Kenneth Wronke, objected that Rothermel had lied
in her bankruptcy schedules and thus was not entitled to a discharge. The bankruptcy court
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1

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No. 07‐3799 Page 2
found in favor of Rothermel. Wronke appealed to the district court, which affirmed, as do
we.
Wronke obtained a judgment against Rothermel in state court in Illinois. Before he
could collect, however, Rothermel filed for bankruptcy. She listed Wronke as a creditor, but
he filed a complaint in the bankruptcy court accusing her of hiding income and objecting to
a discharge. Wronke alleged that Rothermel, who works as a housekeeper, received bonuses
for “animal care, child sitting, house sitting, and other odd jobs” but omitted this additional
income from her bankruptcy schedules. And if she had undisclosed income, Wronke
surmised, she must also possess “hidden assets.”
The only evidence presented at the 15‐minute trial in the bankruptcy court was
Rothermel’s testimony. She denied falsifying her bankruptcy schedules. She explained that
she is a salaried employee but conceded that occasionally she receives small bonuses that
are not reflected on her W‐2. The last time was in 2004 when she received “a couple of
hundred dollars” for performing extra house‐sitting duties. Rothermel said she considered
this payment a gift.
The bankruptcy court credited Rothermel’s testimony. The court interpreted
Wronke’s complaint as raising objections under 11 U.S.C. § 727(a)(2), (3), (4), and (5) but
concluded that Wronke had failed to meet his burden of proving that Rothermel was not
entitled to a discharge. The court first observed that Wronke lacked evidence that Rothermel
had concealed property with the intent to hinder, delay, or defraud her creditors. See 11
U.S.C. § 727(a)(2). The court then concluded that Rothermel had disclosed enough
information for her creditors to ascertain her financial situation. See id. § 727(a)(3). The
bankruptcy judge further concluded that Wronke had not proved that Rothermel
knowingly made a material false statement under oath. See id. § 727(a)(4). Finally, the court
held that Wronke had not proved his allegation that Rothermel received additional income
over many years and thus determined that there was no unusual loss or deficiency in her
listed assets. See id. § 727(a)(5).
We review a bankruptcy court’s legal conclusions, including its interpretation of the
Bankruptcy Code, de novo, and we review its findings of fact for clear error. See Vill. of San
Jose v. McWilliams, 284 F.3d 785, 790 (7th Cir. 2002). We defer to the bankruptcy court’s
credibility findings because, as the trier of fact, it is in the best position to observe witnesses
to determine whether they are telling the truth. See In re Krehl, 86 F.3d 737, 743‐44 (7th Cir.
1996); In re D’Agnese, 86 F.3d 732, 734 (7th Cir. 1996).
The primary benefit of Chapter 7 is the discharge that allows the debtor a “fresh
start.” In re Chambers, 348 F.3d 650, 653 (7th Cir. 2003). But this privilege is reserved for the

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No. 07‐3799 Page 3
“honest but unfortunate debtor.” Grogan v. Garner, 498 U.S. 279, 286‐87 (1991) (internal
quotation marks and citation omitted); see Peterson v. Scott (In re Scott), 172 F.3d 959, 966
(7th Cir. 1999). Thus, the Bankruptcy Code provides that a bankruptcy court “shall grant the
debtor a discharge,” and then lists several exceptions that deny the privilege of discharge to
dishonest debtors. 11 U.S.C. § 727(a) (emphasis added). And although courts construe
objections to discharge strictly against creditors and liberally in favor of debtors, a debtor
can be denied a discharge if a creditor proves by a preponderance of the evidence that, as
relevant here, the debtor concealed property or lied under oath with the intent to defraud
creditors, that the debtor’s records were insufficient to allow creditors to ascertain her
financial condition, or that the debtor was unable to explain a loss of assets. See 11 U.S.C.
§ 727(a)(2)‐(a)(5); Grogan, 498 U.S. at 291.
As the bankruptcy court noted, Wronke’s complaint does not say which of the
§ 727(a) exceptions precludes the discharge of Rothermel’s debts. His brief on appeal is
equally silent as to the statutory basis of his objections; instead he merely recites a list of
accusations of dishonesty against Rothermel. But we construe his argument as invoking the
same exceptions identified by the bankruptcy and district courts, and we conclude that the
bankruptcy court did not err in determining that Wronke failed to meet his burden to prove
that Rothermel was a dishonest debtor.
Wronke offers us no reason to doubt the bankruptcy court’s finding that Rothermel
was a credible witness. When Rothermel filed her petition in December 2006, she was
required to disclose her income for the two previous calendar years. 11 U.S.C. § 521(a)(1)(B);
FED. R. B ANKR. P. 1007(b)(1). Her testimony shows that she did neglect to disclose “a couple
of hundred dollars” she received in 2004. But even if we assume that Rothermel should
have reported this small sum as additional income, the bankruptcy court did not err in
finding the omission insufficient to prove that she was a dishonest debtor. To prove that
§ 727(a)(2) or (4) forecloses discharge, a creditor must establish, among other things, that the
debtor intended to deceive her creditors. See In re Kontrick, 295 F.3d 724, 736 (7th Cir. 2002);
In re Chavin, 150 F.3d 726, 72 (7th Cir. 1998). But Wronke presented no evidence that in
failing to mention the 2004 payment Rothermel intended to mislead her creditors. As to the
other arguably relevant exceptions to discharge, there was no proof that Rothermel’s
oversight hindered her creditors’ ability to understand her financial situation. See 11 U.S.C.
§ 727(a)(3); In re Scott, 172 F.3d at 969‐70 (noting that generally consumer bankruptcies in
which the debtor has no assets or business affairs do not implicate § 727(a)(3)). Nor did the
omission show that Rothermel’s assets were inexplicably depleted. See 11 U.S.C. § 727(a)(5);
In re D’Agnese, 86 F.3d at 734‐35.
A FFIRMED.

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