## Facts

- Nicole E. Rivers filed a Chapter 7 bankruptcy petition in 2011 in the U.S. Bankruptcy Court for the Middle District of Florida.
- Rivers previously lived in Virginia and moved to Florida in 2010, but she still owned a residence in Virginia when she filed.
- Rivers filed a Debtor’s Statement of Intention stating that the Virginia home was not claimed as exempt and would be surrendered.
- On the Chapter 7 means-test form (Form 22A), Rivers claimed a deduction for the Virginia mortgage payment as a secured-debt expense.
- With that deduction included, Rivers reported monthly disposable income of $102.73 on Form 22A.
- The United States Trustee moved to dismiss the case under § 707(b)(1), arguing that deducting the Virginia mortgage payment was improper because Rivers intended to surrender the home.
- The United States Trustee asserted that if the mortgage deduction were removed, Rivers’s monthly disposable income would be approximately $2,595, triggering the § 707(b)(2) presumption of abuse.

## Issues

1. Whether a Chapter 7 debtor who states an intent to surrender real property may deduct the property’s mortgage payments as “payments scheduled as contractually due” under 11 U.S.C. § 707(b)(2)(A)(iii) in calculating the means test.
2. If the deduction is disallowed, whether the recalculated means test creates a presumption of abuse requiring dismissal (absent conversion).

## Decision

- The court held that Rivers could not deduct the Virginia mortgage payment in her § 707(b)(2) means-test calculation because she had stated her intent to surrender the property.
- After removing the mortgage deduction, Rivers’s disposable income was sufficient to trigger the statutory presumption of abuse under § 707(b)(2).
- The court granted the United States Trustee’s motion to dismiss under § 707(b), subject to Rivers’s ability to avoid dismissal by converting the case to Chapter 13 within the time allowed by the court’s order.

## Legal Principles

- Under § 707(b)(2)(A)(iii), the secured-debt deduction for “payments scheduled as contractually due” is not properly taken for collateral the debtor has elected to surrender, because those payments are not expected to be made during the post-petition period measured by the means test.
- The means test is applied to estimate a debtor’s ability to pay unsecured creditors; deductions should not include expenses tied to property the debtor has chosen to give up.
- When the means-test calculation (without the surrendered-property mortgage deduction) exceeds the statutory thresholds, a presumption of abuse arises under § 707(b)(2), supporting dismissal or conversion of the Chapter 7 case.

## Conclusion

In *In re Rivers*, the bankruptcy court ruled that a Chapter 7 debtor who states an intent to surrender a home may not reduce means-test disposable income by deducting that home’s mortgage payments as secured-debt expenses. Disallowing the deduction raised Rivers’s disposable income enough to trigger the § 707(b)(2) presumption of abuse, so the court granted the United States Trustee’s motion to dismiss unless Rivers converted to Chapter 13.


In re Rivers, 466 B.R. 558 (2012)