Wanda Michelle Daniels-Brown

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In Re: 	Case No. 08-11121PM
Chapter 7
Wanda Michelle Daniels-Brown,
Debtor.
W. Clarkson McDow, Jr., United States
Trustee, Region Four,
Movant,
v.
Wanda Michelle Daniels-Brown,
Respondent.
MEMORANDUM OF DECISION
This case comes before the court on the Motion filed by the United States
Trustee to dismiss this case under 11 U.S.C. § 707(b) as an abuse of the bankruptcy
system. As alleged in paragraph 46 of the Motion, “[t]his case represents the type of
abuse for which the amended Section 707(b) was intended. It would be an abuse of
the system for the Debtor to be allowed a discharge without contributing all of her
available disposable income to repay unsecured creditors through a Chapter 13
plan.” For the reasons set out hereafter, the court will grant the Motion in
consideration of the totality of the circumstances.
Date signed November 10, 2008
Entered: November 12, 2008 Case 08-11121 Doc 55 Filed 11/12/08 Page 1 of 5

-2-
11 U.S.C. § 707(b)(3) provides:
(3) In considering under paragraph (1) whether the granting of relief would
be an abuse of the provisions of the chapter in a case in which the
presumption in paragraph (A)(i) of such paragraph does not arise or is
rebutted, the court shall consider–
(A) whether the debtor filed the petition in bad faith; or
(B) the totality of the circumstances (including whether the
debtor seeks to reject a personal services contract and the
financial need for such rejection as sought by the debtor) of the
debtor’s financial situation demonstrates abuse.
By order entered October 7, 2008, this court granted, in part, and denied, in
art, the Debtor’s Motion for Summary Judgment and set this matter for trial with
respect to the United States Trustee’s arguments under 11 U.S.C.§ 707(b)(3). A
disposition in favor of the United States Trustee under this subsection renders the
remaining controversy under 11 U.S.C. § 707(b)(2) moot.
At the outset, the United States Trustee concedes that this bankruptcy
petition was not filed in bad faith. The court agrees wholeheartedly with this
concession. From its observations, the court finds that the Debtor is an honest and
hard working woman who found herself in a situation that was untenable. She
sought legal counsel to deal with that situation. With that legal advice, she filed
this bankruptcy case under Chapter 7. She was absolutely straightforward in her
responses to the Chapter 7 Trustee and disclosed all relevant facts. The court finds
her testimony credible in all respects. There is not a scintilla of evidence that the
Debtor incurred any debt beyond her ability to repay, aside from the home loans.
As to these loans, she could not be expected to have anticipated that her marriage
would deteriorate and that she would have to flee the marital home to preserve her
sanity. She drives a 10-year old automobile. Her budget, aside from some items,
appears reasonable.
After the Debtor’s marriage to Norman Leonardo Brown on October 3, 2006,
matters were set in motion that led to her bankruptcy filing on 2008. On December
Case 08-11121 Doc 55 Filed 11/12/08 Page 2 of 5

-3-
18, 2006, she bought the Thornknoll property from Brown and his former wife for
$520,000.00. As a result of threats and pressure from Brown, she was forced to sign
a deed that conveyed the property to Brown and her as tenants by the entirety on
June 27, 2007. There was no consideration for this deed, but as will be shown,
nothing of value was conveyed by this coerced transfer. The Debtor endured
Brown’s drunken behavior as long as she could. She moved out of the Thornknoll
property at the end of August, 2007 (Statement of Financial Affairs). Her last
payment to Indymac Bank was for that month. At the time that she left the house,
she was current on the purchase money loans. The court reaches this conclusion
from the Motion for Relief From Stay filed by IndyMac Bank (#12).
The United States Trustee urges that the failure to disclose the transfer to
Brown on the Statement of Financial Affairs has some significance. While this
transaction should have been disclosed, the court finds that fact has no relevance to
the present inquiry. The lack of equity in the Thornknoll property at the time of
transfer is evidenced by the fact that the subsequent foreclosure by the secured
creditor of the senior of two liens held by it securing her obligations on the property
resulted in a deficiency in excess of a quarter of a million dollars. The court is
astounded by the magnitude of the deficiency, since the foreclosure took place
slightly more than a year after the loans were extended.
The Debtor’s Schedules E and F show the following unsecured creditors:
Prince George’s County (2007-2008 Real Estate Tax) 	$6,963.99
Bank of America (Credit Card Charges) 	$6,561.88
Beta Finance Company (Furniture Membership) 	$1,133.72
The Debtor’s Schedule D showed the following creditor holding secured claims:
Indymac Bank (Home Loans) 	$523,510.50
In connection with the foreclosure process, the real estate tax was paid. The
Debtor testified that the Beta Finance Company claim had been paid after the filing
of the petition. The Debtor may pay any debt voluntarily. 11 U.S.C. § 524(f). So,
Case 08-11121 Doc 55 Filed 11/12/08 Page 3 of 5

-4-
the Motion is limited to the Debtor’s credit card obligation to Bank of America and
the post-filing deficiency claim of Indymac Bank.
While there is no testimony to this effect, the court finds that this case was
filed to discharge any possible deficiency to Indymac Bank. At this point it is useful
to understand that the Debtor could have “gamed” that creditor, had she elected to
file her bankruptcy case under Chapter 13. A Chapter 13 Plan could have provided
for 100% payment of the unsecured creditors, paying the arrearage to Indymac
Bank over time and then making payments as they became due. To a certainty that
Plan would have been confirmed. In due course, not receiving post-filing payments,
Indymac Bank would have filed for relief from the automatic stay under 11 U.S.C.
§ 362(a). That unopposed motion would have been granted. Upon foreclosure,
Indymac Bank would have refused further payments from the Chapter 13 Trustee.
As is customary in such cases, the Chapter 13 Trustee would have then sought and
the court would have granted a motion disallowing the claim of Indymac Bank.
Upon payout of the other creditors, the Debtor would have received her Chapter 13
discharge. But the Debtor did not elect this devious route. Instead, she filed her
case under Chapter 7 and stated honestly her intention under 11 U.S.C. § 521(a)(2)
to surrender the Thornknoll property.
Nonetheless, the court must view this case upon consideration of the totality
of circumstances that appears to reflect abuse of the provisions of Chapter 7. Her
unsecured debt totaled $14,659.59. On her Schedule J she overstated the cost of
her renter’s insurance, saying that it was $166.00 a month rather than $166.00 a
year. Over five years this understatement amounts to $9,130.00. She rents an
apartment, yet she claims $100.00 a month for home maintenance, repairs and
upkeep. That figure is extraordinary, and the court finds that $25.00 a month is
more than sufficient. The Debtor appears to understate her tax refunds at $1.00
each for state and federal. While her refunds will not be of the magnitude as when
she was a homeowner, there appears to be some refund that will be payable to her.
Finally, the United States Trustee complains that the Debtor should include her
Case 08-11121 Doc 55 Filed 11/12/08 Page 4 of 5

-5-
§ 401(k) payment of $336.97 in the calculation of funds available for creditors. The
court need not reach that issue. Other courts have held that it is inappropriate to
include this as a deduction in making a 11 U.S.C. § 707(b) calculation.
See Eisen v.
Thompson, 370 B.R. 762 (N.D. Ohio 2007);
In re Reimer, 2008 WL 495537 (BC N.D.
Ohio 2008);
In re Littman, 370 B.R. 820, 832 n.31 (BC D. Idaho 2007). However,
the employee stock purchase plan payment of $67.38 does not meet the test.
Accordingly, upon consideration of “the totality of the circumstances” the
court finds that this case presents an abuse of the provisions of Chapter 7. An
appropriate order will be entered.
cc: 	Debtor
Debtor’s Counsel
Chapter 7 Trustee
United States Trustee
End of Memorandum
Case 08-11121 Doc 55 Filed 11/12/08 Page 5 of 5