Monday, August 13, 2007

bankruptcy - dismissal - bad faith - sec. 707(a)

In re Perlin - Third Circuit - August 3, 2007

In adjudicating a motion to dismiss assserting bad faith under 11 USC 707(a), it is within the discretion of the bankruptcy court to consider a debtor's monthly income and expenses together with any other factors relevant to a debtor's good faith in filing for bankruptcy, reflecting the "fact-intensive nature of the good-faith inquiry."

Net worth, future prospects and ability to repay are not a valid cause for dismissal. Dismissal should be carefully confined to only truly egregious cases that entail concealed or misrepresented assets and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based on conduct akin to fraud, misconduct or gross negligence.