Case:04-03642-jdg

Doc #:23 Filed: 11/24/04

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IN THE UNITED STATES BANKRUPTCY COURT

Western District of Michigan

In the Matter of:

MATTHEW T. FLEURY,
REBECCA L. FLEURY,
Debtor(s)

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Case No. SK 04-03642

Chapter 13

DEBTORS RESPONSE TO MOTION

OF UNITED STATES TRUSTEE FOR DISMISSAL OF CASE

NOW COMES R. Todd Redmond, Attorney for Debtors, Matthew T. and Rebecca L. Fleury,
and for his Response to Motion of United States Trustee for Dismissal of Case says as follows:
1. The U.S. Trustee has supervisory jurisdiction over this case under 11 U.S.C. Section
307, 11 U.S.C. Section 707(b), and 28 U.S.C. Section 586(a)(5).
Answer: Admitted.
2. On March 23, 2004, the Debtors filed a petition for relief under Chapter 7 of the
Bankruptcy Code. The Debtors 11 U.S.C. Section 341 Meeting was first scheduled for May 14,
2004. The Court has subsequently entered orders extending the time period to file this motion.
Answer: Admitted.
3. The petition lists liabilities totaling $302,723. Included in this total are debts of $146,095
and $31,800, each secured by a mortgage on the Debtors residence; a debt of $30,469 secured
by a lien on the Debtors 2004 Honda; a debt of $24,263 secured by a lien on the Debtors other
2004 Honda; a debt of $7,500 secured by a lien on the Debtors 1999 Smoker Craft boat; and forty
general unsecured debts totaling $62,594. These debts appear to be primarily, if not exclusively,
consumer debts within the meaning of 11 U.S.A. Section 707(b).
Answer: Denied for the reason that it is untrue. The Debtors had a business that went
under and most of these debts, credit cards and second mortgage were due to the business
failure and are not consumer debt.
4. The Schedule of Current Income and Expenses filed with the petition describes the
Debtors monthly net (or take-home) income as $4,721, and their monthly expenses as $5,210.
Therefore the Debtors indicated they expected to earn $70,164 in 2004. The Debtors reported
earning $79,296 in 2002, and $73,579 in 2001. On their 2003 federal income tax return the
Debtors reported wage and salary income of $88,016, but this was reduced by an unspecified
business loss of $45,311, resulting in a tax refund of $9,614. The Debtors have two dependent
children.

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Answer: Admitted. The unspecified business loss was due to the failure of debtors
business The Scrap Shack which closed October 3, 2003.
5. Upon the face of the petition and its schedules, the Debtors have no disposable income
which they could apply toward repayment of their debts under Chapter 13.
Answer: Admitted.
6. However, the Debtors expenses appear to be unreasonable and overstated. The
Debtors currently spend $546 per month to finance their 2004 Honda Odyssey (valued at $25,000
and subject to a secured claim of $30,469), which debt they recently reaffirmed. The Debtors have
also reaffirmed their debt on the 2004 Honda CRV at $435/mo. (valued at $17,000 and subject to
a secured claim of $24,263). According to the Debtors Schedule J, they allocate $981/mo. for
vehicle installment payments. The Debtors could significantly and reasonably reduce their vehicle
expenditures (including insurance of $175/mo.) by surrendering these vehicles and replacing them
with less costly yet reliable transportation. Assuming the Debtors could place the 2004 Hondas
each with a vehicle costing only $300 per month, the Debtors would save at least $481 per month.
Alternately, the Debtors would find that converting to a Chapter 13 case could be beneficial to
them because they would be able to reduce the amount of the secured debt down to the value of
the vehicles.
Answer: Denied for the reason that it is untrue. Debtors traded in older used cars, a 2000
Chevy Ventura and a 1998 GMC Jimmy to purchase current cars because the new payments
were only $20 more per month and they faced significant repair issues on both older
vehicles.
7. The Debtors expenses include monthly mortgage payments of $1,298. The home is
valued at $175,000, but subject to mortgage claims of $177,896. Because the Debtors have no
equity in this house, they are essentially paying expensive rent to live there. Nevertheless, the
Debtors have indicated they intend to reaffirm their debts on the house to the secured creditor.
If the Debtors were instead to surrender their home, they could likely find comfortable replacement
housing for $1,000/mo., saving an additional $298/mo..
Answer: Denied for the reason that it is untrue. House payment is $1,100.
mortgage of $222 was due to the failure of the business.

The second

8. The Debtors expense budget includes some general monthly allowances for such
additional items as electricity and heating fuel ($300/mo.), telephone ($100/mo.), cable/trash
($66/mo.), food ($675/mo.), and piano lessons/Sports/Child Care in summer (425/mo.). These
items are not reasonably necessary for the Debtors maintenance and support, and could
reasonably be reduced by $100, $50, $40, $175, and $325 (pro rating child care), respectively,
creating $690 per month to further repay creditors.
Answer: Denied for the reason that it is untrue. See attached receipts for electricity/gas
and phone/cable. Debtor is a police officer and needs a cell phone for work.
9. The Debtors Schedule J also includes a $105 monthly student loan payment. Instead,
these funds should be available to pay all other general unsecured creditors as well. If this is a
nondischargeable debt, an appropriate part of this payment could be devoted to their student loan
obligation as part of a Chapter 13 Plan.

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Answer: This statement is neither admitted nor denied because of insufficient information
on which to base an answer and leaves the movant to its proofs.
10. In deciding a motion to dismiss under 11 U.S.C. Section 707(b), the Bankruptcy Court
can also consider the alternatives available to the Debtors, including good, old fashioned belt
tightening. In re Krohn, 886 F.2d 123, 128 (6th Cir. 1989); See also, Wilson v U.S. Trustee (In re
Wilson), 125 B.R. 742, 746-747 (W.D. Mich 1990). Therefore, the adjustments discussed in the
paragraphs above are appropriate.
Answer: Denied for the reason that it is untrue.
11. After making only the changes discussed in paragraph 6 through 9 above, not including
any possible tax refunds, the Debtors could now fund a Chapter 13 plan which would pay $39,060
or 62% to their unsecured creditors over 36 months. The Debtors could pay 100% of their
unsecured creditors over 60 months.
Answer: Denied for the reason that it is untrue. The above stated changes would make
expenses of $3,741, with income of $4,721 or $1000 per month.
12. Moreover, the Debtors purchased their late-model vehicles at a time when the Debtors
had already incurred much of the debt they seek to discharge and therefore knew, or should have
known, that they could not afford new vehicles. The Debtors financed both of their 2004 Hondas
in February 2004, less than two months before their bankruptcy petition was filed.
This
unrestrained spending during the months prior to filing bankruptcy constitutes a lack of good faith
and independent grounds for dismissal of this case.
Answer: Denied for the reason that it is untrue. Debtors in good faith planned long term
for cars.
13. Finally, the Debtors have recently reaffirmed the debt on their 1999 Smokercraft boat,
motor, and trailer. As part of that reaffirmation, Debtors counsel signed a statement that the
reaffirmation does not impose an undue hardship on Debtor or a dependent of Debtor. If so,
these funds should instead be available to repay their unsecured creditors because no hardship
would result.
Answer: The Debtors would be willing to give up their boat.

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Wherefore the Debtors pray that this matter be set for hearing and that the Trustees
motion be denied.
Dated: November 23, 2004

REDMOND & REDMOND, P.L.C.

By: /s/ R. Todd Redmond

Attorney for Debtors

R. Todd Redmond (P51347)
Redmond & Redmond, PLC
480 W. Lovell Street
Kalamazoo, MI 49007
(616) 381-9010

COPIES SERVED UPON:

Stephen Langeland, Trustee, 350 East Michigan Avenue, Suite 130, Kalam azoo, MI 49007
Office of the U.S. Trustee, The Law Building, Suite 202,330 Ionia St., N.W ., Grand Rapids, MI 49503
Debtors, Matthew and Rebecca Fleury, 6336 Eagle Ridge Drive, Kalam azoo, MI 49004