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This article challenges the conclusions set forth in Justin H. Dion's article, "Timing Is Everything...or Is It?: Cortez Challenges the 'Snapshot' Approach to Analyzing Abuse Pursuant to §707(b),"1 which appeared in the October 2006 issue of the ABI Journal. In his article, Dion argues that, pursuant to the decision set forth by the U.S. Court of Appeals for the Fifth Circuit in U.S. Trustee v. Cortez,2 postpetition changes in a debtor's financial circumstances must be considered for purposes of evaluating a §707(b)(1) abuse dismissal motion.
Cortez involved a chapter 7 case that was filed prior to the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and that was sought to be dismissed pursuant to the pre-BAPCPA version of §707(b). Dion asserts that the amendments made to §707(b) by BAPCPA were insubstantial and would not have altered the outcome had it been analyzed pursuant to the BAPCPA version of §707(b).3 The argument that BAPCPA did not effectuate substantive changes to §707(b) leads Dion to overestimate Cortez with respect to the decision's impact on future §707(b)(1) abuse dismissal motions. If one properly takes account of the significant structural changes made to §707(b) by BAPCPA and their impact on judicial discretion, it becomes clear that these changes have rendered Cortez largely inapplicable in a post-BAPCPA world.
Judicial Discretion under §707(b)
One of the most significant BAPCPA amendments to Code §707(b) was the broadening of the standard pursuant to which an individual debtor's chapter 7 case may be dismissed -namely, from substantial abuse to abuse. In conjunction with the expansion of the dismissal standard, Congress constrained in various ways the opportunity for judges to exercise their discretion to define what constitutes abuse. First, Congress created a mechanical and formulaic means test that gives rise to a presumption of abuse if a debtor's disposable monthly income exceeds certain amounts,4 a presumption that may be rebutted only under a narrow set of circumstances and pursuant to highly specific, statutorily-defined procedures.5 second, for those cases where the presumption of abuse does not arise or is rebutted, Congress has mandated that a court consider whether the debtor filed for bankruptcy in bad faith or whether the totality of the circumstances of the debtor's financial situation demonstrates...