Case Conclusion Date: 03.11.2005
Practice Area: Bankruptcy & Debt
Outcome: Dismissal based on ineligibility reversed.
Description: In a case pre-dating the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), the bankruptcy court dismissed the debtor's Chapter 7 case as a substantial abuse based on her monthly expenses being excessive in the court's personal view, notwithstanding they were within the IRS's guidelines for tax payment plans. On appeal, the Ninth Circuit Bankruptcy Appeals Panel reversed, holding that the court had failed to articulate objective standards for assessing the debtor's expenses and remanded. Within the year of the decision, Congress enacted BAPCPA, which codified the use of the IRS standards to determine debtor eligibility for Chapter 7 relief, a principle the Debtor had advocated. At its annual convention that year, the National Association of Consumer Bankruptcy Attorney's ranked the Voelkel decision as one of the top 10 most significant cases in 2005 effecting consumers' rights.