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Abuse
In Chapter 7, abuse is the legal ground on which a court may dismiss a case filed by an individual whose debts are primarily consumer debts, or convert it with the person's consent, because granting relief would misuse the chapter. 1
Talk to a lawyerHow it works
Abuse here is a legal conclusion about whether Chapter 7 is the right chapter, and it can rest on income figures alone. For individual filers, a means test is used to decide whether a filing is presumed to be an abuse. If it is, the case may be dismissed or converted, usually to Chapter 13. 2
The means test compares a filer's income with Census Bureau median income figures and IRS expense standards, which the U.S. Trustee Program publishes and updates. 3
A case can also be challenged when the presumption does not arise or has been rebutted. The court then looks at whether the petition was filed in bad faith, or whether the debtor's overall financial situation shows abuse. 1
The court can raise the question itself. The United States trustee, the case trustee or any party in interest can raise it by motion. The court decides after notice and a hearing. 1
Common questions
Does the abuse rule apply if my debts are mostly business debts?
The rule covers Chapter 7 cases filed by individuals whose debts are primarily consumer debts, meaning personal rather than business debts. Whether your debts count as primarily consumer debts depends on your facts, so check with a bankruptcy lawyer. 1
What happens if the court finds abuse?
The court may dismiss the case. With your consent, it may instead convert the case to Chapter 11 or 13. 1
Sources
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