Summary:
In March 2025, the debtor, a licensed clinical social worker, filed a Chapter 7 petition, omitting or underreporting significant self-employment income from her counseling business, QC Counseling, along with other assets and creditors. An audit revealed that her actual six-month average income was nearly double what she reported, creating a $232,675.80 sixty-month disposable income figure and triggering the § 707(b)(2) presumption of abuse. She failed to rebut the presumption and, under the Calhoun factors, the court also found bad faith, citing inflated expenses, high-end housing and vehicle costs, and inaccurate schedules.
While the base case was pending, she filed two adversary proceedings: one to discharge $104,867 in student loans under the Brunner undue hardship standard, and one to discharge $29,178 in recent federal income taxes under § 105(a) equitable powers. On the student loans, the court found she failed all three Brunner prongs — her corrected income left ample surplus to make the $315 monthly payment, her circumstances were not likely to persist in a way that would prevent repayment, and her decade-long history of making less than 1% of required payments showed a lack of good faith. On the taxes, the court noted § 523(a)(1) expressly bars discharge of the recent liabilities and that § 105(a) cannot override explicit Code provisions.
The court granted the motions to dismiss the base case under §§ 707(b)(1), (b)(3) and (a), and separately dismissed both adversary proceedings under Rule 12(b)(6).
Comment:
Once the base Chapter 7 was dismissed for abuse and bad faith, the student loan and tax discharge adversaries were effectively academic — no bankruptcy case, no discharge to except a debt from. While there is a line of authority holding that dismissal of the main case generally moots pending adversaries, Judge Edwards nonetheless issued detailed rulings on both. That may have been intended to create a record discouraging refiling with the same claims, to conserve judicial resources if the debtor tried again, or to provide clarity on the legal shortcomings in her theories. But procedurally, the necessity is debatable: courts have often simply dismissed adversaries as moot upon dismissal of the underlying case as there is no longer a case of controversy in the Adversary Proceedings. While perhaps giving insight into judicial thinking, those portions of this decision are ultimately merely dicta.
An obvious question regarding the bankruptcy petition and the Adversary Proceedings is whether, despite the serious miscalculations and errors in those, the pro se debtor actually completed all of the complicated schedules, pleadings and calculations necessary for a bankruptcy case completely on her own. (That those calculations and pleading were inaccurate and always tilted in her favor could be seen as evidence of sophistication.) And while on the face of the filings, the debtor denied using a non-attorney preparer or a lawyer ghost-writer and the documents lack sovereign citizen or obvious AI-generated language, that absence of evidence is not conclusive proof that none occurred.
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