In re Showers

James and Laurie Showers (debtors) filed a voluntary chapter 7 bankruptcy petition, along with the necessary schedules and Form 22A, in January 2008. In March, May, and September 2008, the Showerses amended their schedules and Form 22A. The amended Form 22A indicated that the Showerses had a gross monthly household income of $11,463.64 and a gross annual household income of $137,563.68 for a household size of two people. The United States Trustee (the trustee) moved to dismiss the Showerses’ bankruptcy case, asserting that a presumption had arisen under 11 U.S.C. § 707(b) that the Showerses’ chapter 7 petition was abusive because their income was too high to qualify for chapter 7 relief. In analyzing the Showerses’ Form 22A, the bankruptcy court noted that if the debtors’ gross annual household income exceeded the median family income for a family of the same size in the same state as of the date of the bankruptcy petition, analysis of the debtors’ means-test calculation would be necessary to determine if the filing should be considered abusive. The court found that the Showerses’ annual household income exceeded the $59,423 median income for a two-person household in Virginia, so further analysis was necessary. Although the means-test calculation completed by the Showerses suggested that a presumption of abuse did not arise, the trustee asserted that the Showerses had improperly performed the Form 22A means-test calculation because they had included $86,000 in improperly classified student-loan debt. The court agreed and concluded that a presumption of abuse arose when the calculation was performed with the student-loan debt classified correctly. Accordingly, the court shifted the burden to the Showerses to rebut the presumption of abuse. In attempting to rebut the presumption, the Showerses asserted that James’s income might be decreasing in the future due to reduced overtime, and they argued that this justified reducing James’s income in the means-test calculation.