In re Baum
United States Bankruptcy Court for the Northern District of Ohio
386 B.R. 649 (2008)
- Written by Brett Stavin, JD
Facts
In June or July of 2006, Darlene Baum (debtor) began to gamble online, using credit cards to finance the transactions. Over the next three or four months, Baum’s gambling increased to the point that it consumed all aspects of her life. Eventually, Baum realized the scope of her gambling problem, and in November 2006, she ceased all gambling and sought the assistance of a counselor. However, even though Baum ceased gambling, her losses during the three- or four-month span totaled approximately $40,000. Baum spoke with a family friend who was an attorney about the matter. Baum also investigated several debt-consolidation services, but even if her debts were consolidated, the monthly payments would have been out of her reach. Accordingly, in February 2007, Baum contacted a bankruptcy attorney and filed for bankruptcy under Chapter 7 of the Bankruptcy Code. On September 10, 2007, the United States trustee filed a motion to dismiss based on abuse of Chapter 7, arguing that Baum’s bankruptcy filing was in bad faith and amounted to a dishonest relationship with her creditors. The trustee argued that the case was not filed as a result of illness, calamity, disability, or unemployment, and that the bankruptcy was the direct result of gambling debts. In the trustee’s view, Baum knew that the gambling debts were beyond her ability to repay and that she intended to keep the winnings if she won but discharge the debt if she lost. In response, Baum argued that she did intend to pay back the creditors, but simply was unable to do so, and that therefore the bankruptcy filing was not an abuse of Chapter 7.
Rule of Law
Issue
Holding and Reasoning (Kendig, J.)
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