E.D.N.C.: In re Gregory- Marital Adjustment under § 707(b)


The Debtor excluded from her CMI her non-filing husband’s monthly payments of $166.00 for his student loans and $1,628.00 related to  their former residence, including renovation costs..  This resulted in a negative disposable monthly income.  The Bankruptcy Administrator argued that since the non-filing spouse was spending money on expenses and renovations of joint property, such payments were benefitting the Debtor and should be included in CMI.

First the Bankruptcy Court and then, on appeal, the District Court agreed with the Debtor, finding that 11 U.S.C. § 101(10A)(B) included within the Debtor’s CMI “any amount paid by any entity other than the debtor … on a regular basis for the household expenses of the debtor or the debtor’s dependents….”  The District Court examined the term “household expenses” by looking to  the definition used by the 4th Circuit for the similar term “household goods” in In re McGreevy, 955 F.2d 957, 961-962 (1992), as “those items of person property that are typically found in or around the home and used by the debtor or his dependents to support and facilitate day-to-day living within the home, including maintenance and upkeep of the home itself.”  Even if the non-filing husband were to stop paying  these debts, “it would not affect the day-to-day functioning of the debtor’s household.”

The Bankruptcy Administrator also objected under the “totality of the circumstances” test of 11 U.S.C. § 707(b)(3), arguing that as the former residence was unencumbered, its eventual liquidation (even though fully exempt) would  provide sufficient proceeds to pay all of the Debtors claims.  Using the pre-BAPCPA Green factors as “instructive guidance”, the District Court held that exempt assets were not a basis for finding abuse under  § 707(b)(3).

For a copy of both the district and bankruptcy court opinions, please see:

Gregory- Marital Adjustment under § 707(b) (District).pdf

Gregory- Marital Adjustment under § 707(b) (Bankruptcy).pdf


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

Tagged with: , , , ,

Leave a Reply