17 Pages Posted: 7 Mar 2007
Many provisions of the new bankruptcy amendments have vexed practitioners, judges, and scholars alike. One specific troublemaker is new section 707(b)(3), which accords judges discretionary grounds to dismiss the petitions of abusive debtors. Its Clause (B) contains the catch-all ground known well to balancing fans; dismissal is allowed for abuse upon considering the totality of the circumstances. Commentators quickly divided into two camps in scrutinizing this provision. The first (exemplified by Bankruptcy Judge Eugene Wedoff) believes that Clause (B) is a wide grant of power, especially for debtors who skate by the letter if perhaps not the spirit of the means test. The second (exemplified by Professors Marianne Culhane & Michaela White) believes that judges should only dismiss for pseudo-bad faith because All Things Financial are covered by the means test. Trying to find middle ground, this brief article attempts to irritate both sides equally by suggesting a third course to make sense of Congress' statutory gibberish: allowing scrutiny of the debtor's assets (including exempt ones) but not the debtor's income. Such an approach, among other virtues, avoids a confiscatory economic punishment of frugal debtors that Congress surely did not intend.
Keywords: totality, debtor, post-means
JEL Classification: G33
Suggested Citation: Suggested Citation
Pottow, John A. E., The Totality of the Circumstances of the Debtor's Financial Situation in a Post-Means Test World: Trying to Bridge the Wedoff/Culhane & White Divide. Missouri Law Review, Vol. 71, 2006; U of Michigan Law & Economics, Olin Working Paper No. 07-006; U of Michigan Public Law Working Paper No. 76. Available at SSRN: https://ssrn.com/abstract=967390