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ELECTRONIC CITATION: 13 FED App.0003P (6th Cir.)

File Name: 13b0003p.06

BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: STEVEN J. WEIXEL

 ANN M. WEIXEL,

Debtors.

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No. 12-8047

Appeal from the United States Bankruptcy Court

for the Northern District of Ohio

No. 12-11313

Submitted: May 14, 2013

Decided and Filed: June 28, 2013

Before: HUMPHREY, McIVOR AND PRESTON, Bankruptcy Appellate Panel Judges.

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COUNSEL

ON BRIEF: Stephen D. Hobt, Cleveland, Ohio, for Appellants. Amy L. Good, Linda Battisti,

UNITED STATES DEPARTMENT OF JUSTICE, Cleveland, Ohio, for Appellee.

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OPINION

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GUY R. HUMPHREY, Bankruptcy Appellate Panel Judge. In this appeal, the debtors,

Steven J. Weixel and Ann M. Weixel (the “Weixels”), appeal the bankruptcy court’s order

dismissing their Chapter 7 case as an abuse under 11 U.S.C. § 707(b)(1) and (3). For the reasons

stated in this opinion, the Panel determines that the bankruptcy court’s order should be affirmed.
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I. ISSUE ON APPEAL

The issue on appeal is whether the bankruptcy court erred in determining the totality of the

circumstances of the Weixels’ financial situation demonstrated abuse pursuant to 11 U.S.C.

§ 707(b)(3) and required dismissal of the Weixels’ Chapter 7 case pursuant to § 707(b)(1).

Specifically, the Weixels argue that the bankruptcy court failed to consider the Weixels’ scheduled

priority tax debt and their household’s future housing expense in determining their Chapter 7 case

was an abuse.

II. JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal.

The United States District Court for the Northern District of Ohio has authorized appeals to the

Panel, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C.

§§ 158(b)(6), (c)(1). A bankruptcy court’s final order may be appealed as of right pursuant to

28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it “ends the litigation on the merits

and leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United

States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citation and quotation marks omitted). An

order dismissing a bankruptcy case is a final order. In re Anderson, 397 B.R. 363, 365 (B.A.P. 6th

Cir. 2008).

“[T]he ultimate question of whether to dismiss” a case for abuse under § 707(b) is reviewed

for an abuse of discretion because it is an equitable determination. Behlke v. Eisen (In re Behlke),

358 F.3d 429, 434 (6th Cir. 2004). See Mayor of Baltimore v. W. Va. (In re Eagle Picher Indus.,

Inc.), 285 F.3d 522, 527 (6th Cir. 2002) (equitable determinations are subject to an abuse of

discretion standard). “An abuse of discretion is defined as a ‘definite and firm conviction that the

[court below] committed a clear error of judgment.’ ” Id. at 529. The particular factual findings of

the bankruptcy court are reviewed for “clear error.” Behlke, 358 F.3d at 433. See also Fed. R.

Bankr. P. 8013 (findings of fact are reviewed under a clearly erroneous standard).
At the time that the Weixels filed their petition, to be eligible to file a Chapter 13 case, each 1

debtor’s noncontingent, liquidated, unsecured debt could not exceed $360,475 and each debtor’s

noncontingent, liquidated, secured debt could not exceed $1,081,400. 11 U.S.C. § 109(e). The total of

their scheduled unsecured debt on Schedule F was only $85,143, but the total of their scheduled secured

debt on Schedule D of $1,101,625 was above the statutory cap.

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III. FACTS

A. The Weixels’ Chapter 7 Filing, Schedules, Income, Expenses and Debts

The Weixels filed a Chapter 7 petition on February 26, 2012. The Weixels were not eligible

for relief under Chapter 13 of the BankruptcyCode due to the amount of their debt. Their Schedule 1

I shows five minor children included in their household.

Mr. Weixel is employed as a loan officer at Howard Hanna Mortgage Services. From 2002

until 2008, Mr. Weixel owned a mortgage brokerage company called ABC Mortgage Corporation

(“ABC”). From the time ABC was formed in 2002 until 2006 the business expanded, but due to the

housing crisis ABC is now defunct. Mr. Weixel’s overall income has declined in recent years,

stabilized, and recently has shown signs that it may be increasing. The exact figures are unavailable,

in part because the Weixels did not file with the Internal Revenue Service (the “IRS”) all their

required pre-petition tax returns and also because they did not produce to the United States Trustee

(the “UST”) all the tax returns they did file with the IRS. On Schedule J, his monthly net income

is listed at $7,382, which would be $88,584 a year. Mr. Weixel’s gross income was between

$185,000 and $200,000 in 2005 and peaked at approximately $200,000. In 2010 Mr. Weixel’s gross

income was reduced to approximately $110,000 and by 2011 his gross income was $51,986.

For about five years prior to filing bankruptcy, Ms. Weixel operated her own business

through a limited liability company, The Ride and Workout, which she described as a “high-end

exercise studio.” [Hr’g Tr., p. 63]. Her scheduled income was the average gross receipts from the

business, which appears to have been fairly stable in recent years and perhaps increasing. The 2008

through 2011 business net income was $54,462, $47,441, $55,364 and $62,941, respectively. The
The average monthly income of $13,353 for Ms. Weixel on Schedule I is not correct because

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that figure reflects her monthly business gross income and should reflect her monthly net income, based

upon the separate itemization of the expenses deducted. Schedule J reflects that she had monthly business

expenses in the amount of $10,519.

Mr. Weixel testified that the mortgage payment was $5,500; however, Schedule J reflects the 3

payment as being $5,216. All the figures from the record that include fractions of a dollar are rounded

to the nearest dollar.

 Schedule E reflects that the Weixels owe the following income taxes entitled to priority 4

treatment under the Bankruptcy Code for the following periods: a) IRS – $180,000 for 2007 - 2010; b) the

state of Ohio – $50,000 for 2003 - 2011; and c) $10,000 for what appears to be city taxes for 2003 through

2011. The Weixels provided their 2011 tax returns to the UST, but were requested by the UST to supply

tax returns since 2006. According to Mr. Weixel, some unspecified tax returns for that period were filed

but not provided to the UST, but other returns were not filed at all. 

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parties agreed that, after taxes, Ms. Weixel’s business income contributed about $3,000 each month

to the household’s income.2

The Weixels’ combined adjusted gross income stated on their 2011 federal income tax return

was $114,927. Schedule Ishowed an average monthly take home pay of $20,915, although the true

figure is less due to Ms. Weixel’s business expenses not having been deducted to arrive at that

number. After deducting Ms. Weixel’s business expenses, the Weixels’ household monthly takehome income reflected on Schedule Iis $10,395 [$20,915 (Schedule I line 16) – $10,519 (Schedule

J line l6)], or over $120,000 each year.

The Weixels’ expenses listed on Schedule J include a self-described “reasonable” expense

of $3,500 for future housing because the Weixels were not making the monthly mortgage payment

on their residence when the case was filed, which was about $5,500 each month. In addition, 3

Schedule J did not list any suggested expense figure for repaying delinquent income taxes, which

according to Schedule E, totaled $240,000. The business expenses for The Ride and Workout are 4

separately itemized in an attachment to Schedule J. After expenses, Schedule J showed the Weixels

had a de minimus monthly net income of $9.

The Weixels scheduled $1,426,768 in total liabilities. Those liabilities included three

mortgage loans on their residence totaling $829,020; a secured automobile loan in the amount of

$6,016; statutory tax liens; and a judgment lien against their residence. The total of the scheduled
In September 2011 Mr. Weixel stayed at a casino hotel in Atlantic City and withdrew $500 from

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a bank account. On September 15, 2011 another $500 was withdrawn through an ATM at the casino

hotel. On September 16, 2011 Mr. Weixel made a purchase on his debit card for $1,067. On December

15, 2011 Mr. Weixel withdrew $403 from a race track in Erie, Pennsylvania. On December 23, 2011 Mr.

Weixel made a debit card purchase for $67 in Las Vegas, but he testified he was not there to gamble. On

January 24, 2012 Mr. Weixel made a $186 debit card purchase at the Golden Nugget, a Las Vegas casino.

Mr. Weixel stated that the Golden Nugget visit was a complimentary attendance for a poker camp hosted

by professional poker players. On January 25, 2012 Mr. Weixel made a $20 purchase through an internet

poker web site. On April 16, 2012, after the petition was filed, Mr. Weixel spent $99 at a race track and

had two separate $200 ATM withdrawals that same day. On May 11, 2012 Mr. Weixel was at the

Horseshoe Casino in Cleveland, Ohio. Between June 15 - 18, 2012 Mr. Weixel was back in Atlantic City.

Mr. Weixel testified that some of his travel expenses were paid by the poker tournaments. Schedule J does

not directly reference these expenses. The Weixels list $250 each month for entertainment, but it appears

Mr. Weixel did not consider poker an entertainment expense based on his position that his winnings

essentially paid for the hobby. 

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secured debt is $1,101,625. As noted, the Weixels scheduled $240,000 in priority unsecured tax

debt. The non-priority unsecured debt is $85,143. 

B. Weixels’ Lifestyle 

In the Spring of 2006 the Weixels purchased for $590,000 a 3,300 square foot residence at

20922 Avalon Drive in Rocky River, Ohio, with a limited view of Lake Erie, and no money down.

They refinanced the loan, borrowing an additional $50,000 against the home and used some of those

funds for improvements to the home. Due to their financial circumstances, the Weixels stopped

making the mortgage payments by 2009 and filed their bankruptcy petition on February 26, 2012 –

the day before the sheriff sale was scheduled. As of the time of the hearing on the UST’s motion to

dismiss, the Weixels had not moved because a foreclosure sale was not imminent.

Mr. Weixel plays poker. He mostly plays in a local league with a $50 entry fee every other

weekend for a total of $1,300 each year, but also has played in casino tournaments in Las Vegas and

Atlantic City. Mr. Weixel’s losses are capped for these tournaments at his entry fee and he claimed

his winnings allowed him to “break even,” but he had no specific records to support this assertion.

[Hr’g Tr., p. 36]. On two occasions, those being in 2005 and 2007, Mr. Weixel spent $1,500 to enter

a poker tournament. Mr. Weixel won $20,000 between 2008 and 2010, but spent those funds on

entry fees and “potentially any other expenses with the family.” [Hr’g Tr., p. 58]. The Weixels’ bank

statements reveal travel and other expenses related to his gambling. 

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The Weixels’ bank statements were specifically addressed at the hearing. As examples, shortly 6

after the Chapter 7 was filed, the Weixels’ bank account shows $36 spent on a restaurant on March 19,

2012 and $63 spent at a different restaurant that same day. On April 16, 2012 the Weixels spent $63 on

another restaurant. On April 19, 2012 another $78 was spent on a restaurant. Two other restaurant

expenses for $50 are shown for April 23, 2012. The day of the Weixels’ financial education course they

spent $41 at a wine bar and withdrew another $100 through an ATM. Mr. Weixel could not explain or

document any of the specific ATM withdrawals, but stated many of them were for ordinary expenses.

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The UST also introduced other evidence as to the Weixels’ unnecessary spending both prior

to and following the filing of the bankruptcy petition.6

C. The United States Trustee’s Evidence

The UST moved to dismiss this case pursuant to 11 U.S.C. § 707(b)(1), (2) and (3). At issue

before this court is whetherthe bankruptcy court erred in granting the UST’s motion to dismiss under

§ 707(b)(1) for abuse of Chapter 7 of the Bankruptcy Code based upon the totality of the

circumstances of the Weixels’ financial situation as provided for by subsection (b)(3).

The Weixels and John Weaver, a bankruptcy analyst for the UST, testified at the hearing on

the motion to dismiss. The majority of the Weixels’ evidence was presented through Mr. Weixel’s

testimony, with Ms. Weixel’s testimony being limited to the income derived from her business. 

The UST reviewed the Weixels’ bank statements and questioned various entertainment

expenses of the Weixels. The bank statements show that at a time when the Weixels’ bank account

had been repeatedly overdrawn, the Weixels continued to spend funds on entertainment.

The UST concluded that the Weixels, with appropriate budget adjustments, had monthly

disposable income of $2,308. Rather than the $3,500 hypothetical figure for housing used by the

Weixels, the UST chose the applicable means test housing allowance of $1,195. This significant

change reduced the Weixels’ overall expenses by $2,305. Following the same procedure, the UST

made smaller adjustments for other housing expenses, personal expenses [food, clothing, laundry

and recreation], and automobile expenses. The UST added $1,000 to pay the scheduled priority
11 U.S.C. § 707(b)(2)(A)(iv) (“The debtor’s expenses for payment of all priority claims . . .

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shall be calculated as the total amount of debts entitled to priority, divided by 60.”).

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unsecured taxes, which were given a $4,000 credit under the means test [$240,000 / 60]. Except 7

for the delinquent taxes, the UST used the statutory “means test” expenses in determining ability to

pay.

IV. ANALYSIS AND DISCUSSION

A. Statement of the Law

Section 707(b) was added to the Bankruptcy Code in 1984 with other amendments intended

to address consumer credit and was “more than a needless duplication of the ‘other provisions of the

Code that have always required petitioners to file in good faith.’ ” In re Krohn, 886 F.2d 123, 126

(6th Cir. 1989) (quoting In re Walton, 866 F.2d 981, 983 (8th Cir. 1989)). Section 707(b)(1) states

that “[a]fter notice and a hearing, the court, on its own motion or on a motion by the United States

trustee . . . may dismiss a case filed by an individual debtor under this chapter whose debts are

primarily consumer debts, or, with the debtor’s consent, convert such a case to a case under chapter

11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this

chapter.” 11 U.S.C. § 707(b)(1). When the UST moves to dismiss a case under § 707(b), it has the

burden of proving abuse by a preponderance of the evidence. In re Kehl, 463 B.R. 18, 21 (Bankr.

E.D. Mich. 2011) (citing In re Beckerman, 381 B.R. 841, 844 (Bankr. E.D. Mich. 2008)).

In Congress’s most recent significant amendment of the Bankruptcy Code, it made three

notable changes to § 707(b). The Bankruptcy Abuse Prevention and Consumer Protection Act of

2005 (“BAPCPA”): 1) changed the former standard of “substantial abuse” to a lesser standard of

“abuse;” 2) eliminated the presumption in favor of granting bankruptcy relief to debtors; and

3) added a “means test” to Chapter 7 through § 707(b)(2) which creates a statutory presumption of

abuse if a debtor has a defined minimal “current monthly income” remaining after the deduction of

certain allowed expenses. These changes reflect Congress’s intent to limit the availability of Chapter

7 bankruptcy relief to those deserving of a fresh start.
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While much of the focus following the enactment of BAPCPA has related to the mechanical

application of the means test, even if the calculated presumption of abuse provided for by

§ 707(b)(2) does not arise or is rebutted, a debtor’s chapter 7 case may still be found to be abusive

under § 707(b)(3). Schulz v. United States, 529 F. 3d 343, 348 (6th Cir. 2008); In re Mestemaker,

359 B.R. 849, 855 (Bankr. N.D. Ohio 2007). Section 707(b)(3) states, in relevant part, that “[i]n

considering under paragraph (1) whether the granting of relief would be an abuse of the provisions

of this chapter in a case in which the presumption in paragraph (2)(A)(i) does not arise or is rebutted,

the court shall consider . . . (A) whether the debtor filed the petition in bad faith; or (B) the totality

of the circumstances . . . of the debtor’s financial situation demonstrates abuse.” 11 U.S.C.

§ 707(b)(3). Although BAPCPA changed the standard of substantial abuse to abuse and eliminated

the presumption in favor of the debtor being granted relief, § 707(b)(3) otherwise essentially codifies

the principles of pre-BAPCPA case law concerning § 707(b). In re Goble, 401 B.R. 261, 276

(Bankr. S.D. Ohio 2009) (totality of the circumstances test codifies case law prior to BAPCPA

(citing In re Oot, 368 B.R. 662, 665 (Bankr. N.D. Ohio 2007)). 

In the Sixth Circuit, the two seminal § 707(b) cases are Krohn, 886 F.2d 123 and Behlke,

358 F.3d 429. The Behlke decision reaffirms the principles of Krohn. Behlke, 358 F.3d at 433-36.

In Krohn the Sixth Circuit determined that Congress sought to curb “substantial abuse” by denying

Chapter 7 relief to the dishonest or non-needy debtors. Krohn, 886 F.2d at 126 (citing In re Walton,

866 F.2d 981, 983 (8th Cir. 1989)). Thus, a finding of abuse under the totality of the circumstances

test provided by § 707(b)(3)(B) can be predicated upon either lack of honesty, want of need or both.

Beckerman, 381 B.R. at 844-45. The factors outlined in Krohn for assessing the debtor’s honesty

and need for bankruptcy relief combine to serve as the framework for determining the totality of the

circumstances of the debtor’s financial situation. See In re Schubert, 384 B.R. 777, 780 (Bankr. S.D.

Ohio 2008) (listing the combined factors).

An honest debtor is one whose “relationship with his creditors has been marked by essentially

honorable and undeceptive dealings.” Krohn, 886 F.2d at 126. Factors that may be relevant to

ascertaining a debtor’s honesty include the debtor’s forthrightness in preparing and filing his

schedules and other documents, whether he has made substantial purchases on the eve of
“Debtor’s acts within the two (2) years preceding the filing of his Petition of incurring debts

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which he could not afford to repay but for his retirement income, exhibit bad faith in filing of the Petition

and constitute ‘lack of honesty’ which is tantamount to the substantial abuse requirement of Section

707(b).” Ragan, 171 B.R. at 595.

Although the Weixels are ineligible for Chapter 13, their ineligibility is not dispositive and the 9

court may consider other factors to determine neediness. Krohn, 886 F.2d at 127.

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bankruptcy, and whether the Chapter 7 filing was caused by unforeseen or catastrophic events. Id.

The court’s summary of the purpose of § 707(b) sheds light on the “honesty” element of § 707(b):

In essence, § 707(b) allows a bankruptcy court to deal equitably with the unusual

situation where an unscrupulous debtor seeks to enlist the court’s assistance in a

scheme to take unfair advantage of his creditors; it serves notice upon those tempted

by unprincipled accumulation of consumer debt that they will be held to at least a

rudimentary standard of fair play and honorable dealing.

Id. The spectrum of debtors that fall into the “dishonest” category described by Krohn covers a

broader swath than what may be typically envisioned as dishonest people, sweeping in those debtors

who seek to take unfair advantage of their creditors, including through the discharge of unbridled

accumulation of consumer debt. See Schubert, 384 B.R. 777; In re Ragan, 171 B.R. 592 (Bankr.

N.D. Ohio 1994) (pre-BAPCPA); and In re Barnes, 158 B.R. 105 (Bankr. W.D. Tenn. 1993) (pre- 8

BAPCPA) (all standing for the proposition that a debtor living beyond his means and refusing to

adjust his budget and change his lifestyle support dismissal for abuse under § 707(b)(3)).

A “needy” debtor is one whose “financial predicament warrants the discharge of his debts

in exchange for liquidation of his assets.” Krohn, 886 F.2d at 126. In determining whether the

debtor is “needy” the court may consider whether the debtor can repay his debts out of future

earnings. Id. “Other factors relevant to need include whether the debtor enjoys a stable source of

future income, whether he is eligible for adjustment of his debts through Chapter 13 . . . , whether

there are state remedies with the potential to ease his financial predicament, the degree of relief

obtainable through private negotiations, and whether his expenses can be reduced significantly

without depriving him of adequate food, clothing, shelter and other necessities.” Id. at 126-27. 9
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B. The Bankruptcy Court’s Decision

At the conclusion of the hearing, the bankruptcy court ruled that, due to the Weixels’ tax

debt, the presumption of abuse did not arise pursuant to § 707(b)(2), a determination that the UST

has not appealed, and deferred ruling on the § 707(b)(3) dismissal request. In an oral decision

presented subsequent to the day of the hearing, the bankruptcy court ruled that, under the totality of

the circumstances, the Weixels’ case should be dismissed for abuse pursuant to § 707(b)(1) and (3).

The UST did not pursue the bad faith prong of § 707(b)(3)(A) and the court’s determination

was solely based upon § 707(b)(3)(B). Dismissal of cases for bad faith have been limited to the most

“egregious cases that entail concealed or misrepresented assets and/or sources of income, and

excessive and continued expenditures, lavish life-style, and intention to avoid a large single debt

based on conduct akin to fraud, misconduct, or gross negligence.” Indus. Ins. Servs., Inc. v. Zick

(In re Zick), 931 F.2d 1124, 1129 (6th Cir. 1991) (analyzing bad faith as establishing cause under

§ 707(a)). Accordingly, the analysis of the bankruptcy court’s decision will be limited to the

grounds stated under § 707(b)(3)(B) – whether the totality of the circumstances of the debtors’

financial situation demonstrates abuse. The bankruptcy court’sreview of the totality of the debtors’

circumstances is to be conducted based upon the debtors’ circumstances as of the time of the hearing.

Schubert, 384 B.R. at 780 (citing In re Pennington, 348 B.R. 647, 651 (Bankr. D. Del. 2006)).

The bankruptcy court primarily addressed the economic realities of the Weixels’ situation

in her oral decision. The court noted that while Mr. Weixel’s income had decreased over time, Ms.

Weixel’s business income was stable or increasing. Another factor relied upon by the bankruptcy

court was the Weixels’ decisions to purchase a $590,000 house with 100% financing and to borrow

an additional $50,000 through a subsequent refinancing. The bankruptcy court analyzed the

economic effects of Mr. Weixel’s poker hobby, but emphasized that the court was not making a

value judgment as to poker as a hobby. In particular, the court assessed the expenses attendant to

the hobby and how winnings were used when the Weixels’ finances were in distress. The court

found that between 2008 and 2010 Mr. Weixel won about $20,000, but used some of those funds

for additional poker entrance fees instead of necessities. The court was also concerned about the
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travel expenses involved in attending poker tournaments. The court referenced other unnecessary

travel and dining expenses reflected on the bank statements and concluded generally that the Weixels

appeared to have made no adjustment to their lifestyle despite their economic distress. The court left

open the possibility that a subsequent Chapter 7 case could work if the Weixels’ financial situation

had changed.

C. Analysis of the Bankruptcy Court’s Decision

The record supports the bankruptcy court’s decision. The Weixels, despite being in financial

difficulty since 2007, made no attempt to change their upscale lifestyle. 

The most visible example of their lifestyle was their residence. Rather than vacate the

residence, move to a more affordable residence, and adjust to a new lifestyle, the Weixels chose

instead to cease paying upon the mortgage loan, reside in the residence at the lender’s expense, and

wait for a foreclosure. The Weixels ceased making payments on the house by November 2009 and

filed their bankruptcy petition on February 26, 2012, the day before the rescheduled foreclosure sale.

The Weixels’ avoidance of belt-tightening is also exhibited through their recreational habits.

Rather than eliminate his poker travels or use his poker winnings to pay some of his delinquent taxes

or other necessities, Mr. Weixel chose to use some of those winnings for expenses to continue his

poker hobby. The Weixels have continued to expend funds by eating at restaurants, and Mr. Weixel

traveled unnecessarily to play poker. The evidence supports the trial court’sfinding that the Weixels

failed to adjust their upscale lifestyle despite their financial circumstances.

The accumulation of significant consumer debt, including the purchase of a $590,000

residence with 100% of it financed, followed by the borrowing of an additional $50,000, the failure

to file their tax returns and pay income taxes for multiple years, and the lack of any unforeseen or

catastrophic event leading to the bankruptcy are all factors that support the “dishonest” debtor

element of Krohn. Even assuming that the downturn in the real estate market was not foreseeable,

the downturn does not explain or justify the extent of the risk in which the Weixels engaged by

leveraging their residence or their failure to adjust their lifestyle by finding more affordable housing
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and reducing other expenses once the housing collapse occurred. They were able to maintain their

upscale lifestyle by remaining in their house and not paying their mortgage payments and tax

obligations.

The Weixels argue that the bankruptcy court failed to consider their future housing expense

and the payments that they will have to make to the taxing authorities in determining that their filing

constituted an abuse under Chapter 7. The fallacy of this argument is that it focuses on the “needy”

element of the § 707(b)(3) analysis, while side-stepping the “honesty” element of the totality of the

circumstances test. Krohn teaches that need is not the sole consideration in determining whether a

debtor seeks to abuse Chapter 7 – but rather that the need for bankruptcy relief based upon

unprincipled accumulation of consumer debt may also constitute abuse. Moreover, in considering

the Weixels’ housing expense, the bankruptcy court did not err in its “needs” analysis. The court

specifically found the Weixels’ current housing was too expensive and the Weixels presented no

evidence to support the $3,500 figure for housing. The bankruptcy court found that after the

residence was sold and other changes were made, it was possible that the Weixels could be eligible

for Chapter 7 relief. The Weixels never explained why they should be entitled to a housing expense

almost three times the standard means test allowance. The bankruptcy court was entitled to consider

the means test figure used by the UST as the more reasonable figure. In any event, the Weixels

effectively waived this particular position. At the closing argument, after never disputing the UST’s

housing figure during the hearing, Weixels’ counsel stated that, with the exception of the priority

taxes, the Weixels “adopted the U.S. Trustee’s analysis of our expenses.” [Hr’g Tr., p. 75].

The bankruptcy court also did not err in failing to consider the $240,000 in scheduled priority

taxes as the Weixels argue. There are a number of flawsin the Weixels’ position. First, the Weixels

never proposed how they would pay the tax debt or budget it as an expense. The UST used a $1,000

monthly figure for the repayment of these obligations in assessing the Weixels’ disposable income.

The Weixels argued at the hearing that the figure should be $4,000 based upon the means test

formula. But a § 707(b)(3) analysis is not limited to using specific figures from the means test

calculation of § 707(b)(2), including the scheduled priority tax debt, but is an overall analysis of the

totality of the Weixels’ financial condition. In re Booker, 399 B.R. 662, 666-67 (Bankr. W.D. Mo.

2009). Second, it is not clear how much the Weixels owe in back taxes or how their tax liabilities
 Mr. Weixel testified that some unspecified portion of the entertainment expenses constituted 10

business expenses, but he provided no documentation and indicated he failed to deduct these expenses on

the Weixels’ tax returns.

On their Official Form B22A, the Weixels listed the applicable median family income for their 11

household size as $93,099.

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might be compromised in the future. Mr. Weixel conceded that the Weixels did not file all their prepetition tax returns nor did they provide all their filed returns to the UST. Having not even filed all

the required returns and having made no effort to compromise these scheduled debts, the bankruptcy

court was entitled to conclude that the Weixels cannot rely on the $240,000 figure to assert that they

lack disposable income because those same taxes need to be repaid. Disposable income is

independently determined by the court and is not dependent on the financial figures provided by the

Weixels. In re Brenneman, 397 B.R. 866, 871 (Bankr. N.D. Ohio 2008) (citing In re Gonzalez, 378

B.R. 168, 173 (Bankr. N.D. Ohio 2007)). Third, although the bankruptcy court did not specifically

refer to the taxes in her oral ruling, the record demonstrates she was well aware of the issue and even

questioned Mr. Weaver about it during the hearing. Under the circumstances, the bankruptcy court

was entitled to decide what weight to give the limited evidence available concerning the tax debt.

Overall, the record shows that the Weixels made no attempt to adjust their lifestyle over

several years to address a house they could not afford and income taxes they were not paying. Mr.

Weixel continued his poker playing, and the evidence supported the bankruptcy judge’s conclusion

that this pursuit did not pay for itself. The Weixels continued to spend an inappropriate amount of

funds on entertainment in the midst of their financial crisis. The Weixels have not completed and 10

filed all their tax returns in order to explore with the federal, state, and local tax agencies to what

extent their tax debt could be compromised. The Weixels’ financial history shows that these taxing

agencies were conveniently used as “the lender of last resort.”

Finally, despite financial hardships, the Weixels’ income is significantly higher than the

median income for their household size. This potential future income available to the Weixels

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weighs in favor of dismissal. Brenneman, 397 B.R. at 871; In re Peterlin, 457 B.R. 630, 634 (Bankr.

N.D. Ohio 2011) (“A substantial level of income weighs in favor of abuse.”). 
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V. CONCLUSION

This Panel has no scale to measure the difference between “substantial abuse” and “abuse”

of Chapter 7. However, BAPCPA’s relaxing of that standard and elimination of the presumption

in favor of relief being granted to the debtor expressed Congress’s intent that bankruptcy courts be

given more latitude to deny Chapter 7 relief based upon the totality of a debtor’s financial situation.

The bankruptcy court concluded that the totality of the Weixels’ financial condition warranted a

dismissal of this case. Having reviewed the record in its entirety, this court does not have a definite

and firm conviction that the bankruptcy court erred in determining that the UST met his burden to

show that the totality of the Weixels’ financial situation demonstrates abuse of Chapter 7.

For the foregoing reasons, the Panel AFFIRMS the bankruptcy court’s order dismissing this

case pursuant to 11 U.S.C. § 707(b)(1) and (3).