Bankruptcy

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Civil

7th Circuit Court of Appeals

Officials: POSNER, KANNE, and ROVNER, Circuit Judges

Bankruptcy

No. 15-1416 Michael D. Schwartz v. Barclays Capital Inc.

Appellants increased persona expenditures in the wake of bankruptcy considered bad fatih and warranted dismissal of bankruptcy petition.

“The bankruptcy judge, focusing, as we’ve just said is proper, on “for cause” cut loose from the three subsections in section 707(a), dismissed the Schwartzes’ petition for bankruptcy because of their failure to use any of their earnings or assets to pay any part of the debt they owed Barclays. By spending even more than their substantial income for private purposes, they depleted the assets available to pay their creditors. No one is asking them to live in a tent, dress in rags, drive a 1950 Chevy, or emulate Mme. Loisel in Guy de Maupassant’s short story “The Necklace” (“La Parure”) who loses a borrowed necklace that she believes to be very valuable and ruins herself and her husband financially in order to remunerate the owner, only to discover in the end that the necklace was a fake, made of glass and worth almost nothing. What the Schwartzes failed to do was pay as much of their indebtedness as they could without hardship. Their action was deliberate and selfish, and provides good cause for denying the discharge. The dismissal of their petition will place them under greater pressure to pay off, or at least pay down, their debts than if they’re permitted to persist in living high on the hog (relative to the average American family, which cannot afford to spend $11,100 a month on consumption) in the face of a considerable indebtedness”

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.