In re James

Kevin James (debtor) had worked for Jebro, Inc. since October 1993. In September 2005, Jebro gave James a longevity bonus of $20,000, of which James received $11,910 after tax withholdings and a voluntary 401(k) contribution. At the time he received the bonus, James and his wife had been having financial problems, including a creditor’s judgment against James and garnishment of his wages. In October or early November 2005, James contacted an attorney about filing for bankruptcy, but the attorney declined James’s case. In January 2006, James contacted another bankruptcy attorney, who agreed to represent James. James filed for Chapter 7 bankruptcy in March 2006. Evidence in the bankruptcy proceeding revealed that James had deposited his longevity bonus into his savings account and had withdrawn $7,500 in cash. James spent some of the money on legal fees and living expenses, including increased living expenses incurred after James’s mother, his mother’s husband, and two of James’s nephews moved into James’s home for several months. However, James did not use any of the money to pay his existing debts, because he decided that he would not be able to pay off those debts and wanted to “treat” himself instead. James spent the money on a dog kennel and collar, a rifle, bowling equipment, hunting boots, appliances and tools, Christmas gifts, and a trip to Chicago to watch a professional football game. Additional evidence revealed that James and his wife had significant medical expenses and that his wife suffered from heart problems. The United States trustee moved to dismiss James’s Chapter 7 proceeding for abuse under 11 U.S.C. § 707(b)(3), asserting that James had filed for bankruptcy in bad faith. The bankruptcy court considered the trustee’s motion.