## Facts

- Married debtors filed a Chapter 7 petition with primarily consumer debts.
- Their home-related expenses (mortgage and related costs) were about $2,100 per month, roughly 40% of monthly income.
- The debtors passed the § 707(b)(2) means test, so no presumption of abuse arose.
- Their actual housing expense was about 2.5 times the IRS-based housing standard used in the means test for a household of their size.
- The U.S. Trustee moved to dismiss under § 707(b), contending the debtors’ budget reflected excessive housing costs and an ability to repay a meaningful portion of unsecured debt over time.

## Issues

1. Whether a Chapter 7 case may be dismissed as an abuse under § 707(b)(3)(B) based on the totality of the circumstances, even when the debtor passes the § 707(b)(2) means test.
2. Whether maintaining housing costs far above the IRS standard may be treated as an unreasonable expense supporting dismissal for abuse under § 707(b)(3)(B).

## Decision

- The court granted the U.S. Trustee’s motion to dismiss under § 707(b)(3)(B).
- The court held that passing the means test did not bar dismissal where the debtors’ actual financial situation showed an ability to repay unsecured creditors.
- The court found the debtors’ housing expense was excessive and largely discretionary, and that reducing it would permit meaningful repayment.
- Dismissal was ordered, typically subject to an opportunity to convert to Chapter 13.

## Legal Principles

- Section 707(b)(3) requires an independent abuse analysis when no presumption of abuse arises under § 707(b)(2).
- Passing the means test is not a safe harbor from dismissal under § 707(b)(3)(B).
- In the totality-of-the-circumstances inquiry, a debtor’s ability to repay unsecured debts is a primary, often dispositive factor.
- Courts may evaluate the reasonableness of actual expenses, including high housing costs, and may treat discretionary spending choices as evidence of abuse when they prevent repayment to unsecured creditors.

## Conclusion

The court dismissed the Chapter 7 case as abusive under § 707(b)(3)(B) because the debtors’ high housing costs, though not disqualifying under the means test, reflected discretionary spending that left them with the practical ability to repay unsecured creditors if they reduced those expenses.


In re Durczynski, 405 B.R. 880 (Bankr. N.D. Ohio 2009)