In re Grant, Bankruptcy No. 585-138.

• Decision Date: 22 July 1985
• Docket Number: Bankruptcy No. 585-138.
• Citation: 51 BR 385
• Parties: In re Robert Harold GRANT, Cherry Ann Grant, Debtors.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

51 B.R. 385 (1985)

In re Robert Harold GRANT, Cherry Ann Grant, Debtors.

Bankruptcy No. 585-138.

United States Bankruptcy Court, N.D. Ohio.

July 22, 1985.

Gerald D. Piszczek, Strongsville, Ohio, for debtors.

Robert Harold Grant and Cherry Ann Grant, pro se.

Kathryn Belfance, Akron, Ohio, trustee.

HAROLD F. WHITE, Bankruptcy Judge.

This matter came before the Court on its own motion pursuant to 11 U.S.C. Section 707(b) for the purpose of determining whether or not the within Chapter 7 petition should be dismissed on the grounds that the granting of relief would be a substantial abuse of the provisions of Chapter 7. Hearings were held on May 9, 1985 and June 10, 1985 wherein the debtors, Robert Harold Grant and Cherry Ann Grant, were examined by the Court, and documentary evidence was submitted.

The debtors were represented by Gerald D. Piszczek; Kathryn A. Belfance appeared as interim trustee/trustee; Michael R. Huff appeared as case administrator.

FINDINGS OF FACT

1. Robert Harold Grant and Cherry Ann Grant fka Brock filed a joint Chapter 7 petition on February 7, 1985 which listed one creditor with a secured claim on their residence in the sum of $72,000.00, and 24 unsecured creditors with an aggregate amount of claims in the sum of $63,765.00.

2. On February 7, 1985 the debtors filed a Schedule of Current Income and Expenditures with total monthly income in the sum of $3,385.00 and total monthly expenditures in the sum of $4,806.01, having a net monthly deficiency in the sum of $1,448.01.

3. The most significant assets of the debtors as listed on the schedules filed with their petition are a single family residence with a market value of $72,500.00, a 1982 240D Mercedes (leased) which is listed as husband's property with a market value of $15,000.00, and an unliquidated debt owing Cherry Grant for child support arrearages in the sum of $8,600.00.

4. On February 7, 1985 debtors filed as an attachment to their Joint Statement of Financial Affairs for Husband and Wife Not Engaged in Business and in answer to Item 11 therein, a list of loans repaid from January 3, 1984 to October 21, 1984 indicating check number, date of payment, payee and amount of payment.

5. On March 20, 1985 the Court upon its own motion pursuant to 11 U.S.C. Section 707(b) ordered the debtors to appear before the Court on May 9, 1985 for the purpose of determining whether or not their Chapter 7 petition should be dismissed.

6. On May 2, 1985 the debtors filed an amended Summary of Debts and Property and amended Schedules A-3, B-2, B-3 and B-4, showing unsecured claims without priority in the sum of $65,765.00.

7. On May 21, 1985 the Court filed an order:

(a) Adjourning the May 9 hearing until June 10, 1985;

(b) Finding that the debtors were entitled to income tax refunds from the United States of America and the State of Ohio in excess of $5,319.20;

(c) Finding that the Schedule of Current Income and Expenditures previously filed was inaccurate as to expenses; and

(d) Directing the debtors to file a new projection of income and expenditures.

8. On May 23, 1985 the debtors filed a new Schedule of Income and Expenditures with total monthly income in the sum of $3,358.00 and total monthly expenditures in the sum of $3,333.50, leaving a net monthly excess of $14.50.

9. The reduced monthly expenditures of the second Schedule of Income and Expenditures is due to the following adjustments:

(a) $300.00 reduction in rent/home mortgage assuming the debtors move closer to the husband\'s place of employment;

(b) $210.00 reduction in utility costs;

(c) $283.00 reduction in clothing allowance (d) $335.00 reduction in entertainment expenses; and

(e) various reductions in food, medicine and drugs, insurance, taxes and miscellaneous.

10. Monthly expenditures for transportation in the second schedule have increased by the sum of $180.00.

11. Robert Grant has surrendered his 1982 240D Mercedes to the leasing company, and replaced it with two leased vehicles, a 1985 Nissan at the rental rate of $230.00 per month, and a 1985 Cutlass Sierra at the rental rate of $260.00 per month.

12. Robert Grant is employed by the Huron Road Hospital as Vice-President of Human Resources and Personnel, and has been in its employ for a period of approximately 3 and ½ years.

13. Robert Grant had gross income in the sum of $48,000.00 for 1982, $54,000.00 for 1983, $60,000.00 for 1984 and will earn $65,000.00 in 1985.

14. Robert Grant's income has increased at the rate of 9 percent annually in recent years, and will in all likelihood continue to increase at that rate.

15. There are two minor children residing at the Grant household, ages 12 and 16 years.

16. Cherry Grant is not employed.

17. Robert Grant's net earned income is deposited directly with Society National Bank by his employer.

18. Robert Grant has an emancipated son who resides in Charleston, South Carolina.

19. An appraisal of the personal property at the premises at 977 Damon Road, Medina, Ohio as performed by Chester B. Rector and filed herein shows the fair market value of all items listed therein to be the sum of $1,772.00.

20. Robert and Cherry Grant have not made any payments on any of their major credit card accounts since late October, 1984.

21. Of the total number of unsecured creditors, there are represented 7 major credit card accounts in the aggregate sum of $29,700.00, the largest amount being a 1983 Mastercard account with Society National Bank in the sum of $10,800.00.

22. Joe Huggins is listed as an unsecured creditor of a personal loan in the listed amount of $9,000.00 on Schedule A-2, but is not listed in the attachment to the Joint Statement of Financial Affairs in response to Item 11 therein.

23. During the period covered by the response to Item 11 of the Joint Statement of Financial Affairs the minimum sum of $6500.00 was paid to Joe Huggins according to the check register and cancelled checks of the debtor Robert Grant of his personal checking account at Society National Bank.

24. A reasonable reduction in the style and cost of living of Robert and Cherry Grant, and a corresponding reduction in their amended Schedule of Income and Expenditures, would net an annual savings of approximately $8904.00, exclusive of any income tax refunds or the curing of any child support arrearages.¹

25. Such an annual savings could fund a five-year Chapter 13 plan which would pay approximately 68 percent of all unsecured creditors' claims as listed by the debtors in their schedules, irrespective of any increase in the income of Robert Grant, or of any employment on the part of Cherry Grant.

26. The debtors have not suffered any sudden economic hardship, serious illness, high medical costs, unemployment or other unforeseen calamities.

27. The debtors list on their schedules credit card debts in the aggregate sum of $39,373.50, which appear to be for cash advances and consumer purchases.

28. The only secured creditor listed is Society National Bank, home mortgagee.

29. The debts listed in the amended debtors' Schedule A-3, are primarily consumer debts constituting a minimum of 90 percent of all debts, or the sum of $59,188.50.

30. The Parisian Company, a scheduled unsecured creditor herein, has filed a complaint to determine dischargeability of a debt in the sum of $1,971.70 pursuant to 11 U.S.C. Section 523(a)(2)(A).

31. The pre-petition purchases of the debtors for clothing, entertainment, Christmas presents exhibit the extravagance of their life style, and utter disregard of sound financial planning.

DISCUSSION OF LAW

On June 29, 1984 Congress passed a 105-page revision of the bankruptcy laws, and the president signed the Bankruptcy Amendments and Federal Judgeship Act of 1984 into law on July 10, 1984.² The passage of those amendments was preceded by significant argument and compromise surrounding the consumer credit amendments. This court is called upon for the first time to decide a matter related to one of the new consumer credit provisions: whether a joint petition for chapter 7 relief should be dismissed as a substantial abuse of the provisions of chapter 7.³

The new section 707(b) added by the 1984 amendments provides that:

After notice and a hearing, the court, on its own motion and not at the request or suggestion of any party in interest, may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts if it finds that the granting of relief would be a substantial abuse of the provisions of this chapter. There shall be a presumption in favor of granting the relief requested by the debtor.

Pub.L. No. 98-353, section 312. This new section is effective for cases filed after October 7, 1984. Id. at section 553.

Since this is a matter of first impression, the court must look behind the new provision to its legislative history to determine the proper standard for judicial application. The primary rule of the interpretation of statutes is to ascertain and declare the intention of the legislature, and to carry such intention into effect. Although statements made by legislators on the floor are not the best indication of legislative intent,

Statements made by individual legislators during floor debates are also considered, along with information about contemporary conditions and events, when they establish what problems or evils the legislature was trying to remedy.

2A N. Singer, Statutes and Statutory Construction sect. 48.13 (4th ed. 1984) (Citations omitted).

Unfortunately, all the court is given to divine legislative intent in this instance is a conference report on H.R. 5174⁴ and miscellaneous floor remarks of the sponsor of the original bill and his colleagues. Greater weight may be accorded the remarks of the sponsor of the bill. Id.

The consumer credit amendments of H.R. 5174 were not altered by the conference committee, and were identical in both the house and senate versions. Bankr. Serv., Current Awareness...