March 6th, 2009 by Reed Allmand 
In the Chapter 7 Bankruptcy case of Castellaw, James E. and Jennifer L.; In re the bankruptcy court dismissed the debtors’ Chapter 7 bankruptcy case because they lived a luxurious lifestyle that could not be justified.
The bankruptcy court said:
“As a general matter, the retention of multiple luxury items is hard to reconcile with the exis¬tence of good faith. Good faith has been defined, among other ways, as the absence of intent to seek unconsciona¬ble advantage. Here, the court finds that the Debtors would be seeking and realizing an unconscionable advantage if the court allowed them to proceed in this case.”
The debtors filing for bankruptcy owned a 3,600 square foot home worth $1.2 million, a 2008 Chev¬rolet Suburban worth $48,000, a 2004 Volvo worth $24,500, and a 2006 GMC Yukon valued at $26,000. They also owned a boat worth $17,000, had season tickets to the Dallas Mavericks and held numerous bank accounts, life insurance policies, and retirement accounts. The debtors’ monthly expenditures on their home and vehicles alone totaled $7,000. All of this was on a $100,000 a year salary. The court found that the debtor had not shown any efforts to cut back on their expenses and live within their means and that their bankruptcy filing was due to poor choices.
The bankruptcy court said:
“Here, the court finds that the debtors would be seeking and realizing an unconscionable advantage if the court allowed them to proceed in this case. Discharge in Chapter 7 is not meant for those enjoying a substantial income and seeking to transfer the cost of an unnecessarily extravagant lifestyle to creditors.”
This is what happens when debtors filing for bankruptcy fail to complete proper pre-bankruptcy planning. If these debtors had worked with an experienced bankruptcy attorney he/she would have worked with them to complete the proper pre-bankruptcy planning. The pre-bankruptcy planning might have included credit counseling to determine what actions should be taken before filing for bankruptcy including the liquidation of some assets for the repayment of creditors and budgeting.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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