Bankruptcy Court Dismisses Chapter 7 Case After Making Finding of Bad Faith

A bankruptcy judge in Los Angeles granted the trustee’s motion to dismiss a Chapter 7 case, ruling that the debtors filed their bankruptcy petition in bad faith. In re Olen, No. 2:13-bk-38721, mem. decision (Bankr. C.D. Cal., Aug. 22, 2014) (PDF file). The trustee moved to dismiss the case on multiple grounds, including the claim that granting relief to the debtors would be an abuse of Chapter 7’s provisions. The court held that the debtors had not provided enough financial information to allow it to rule on the question of abuse. It then held that this same lack of information, combined with evidence of substantial consumer expenditures shortly before and after filing the Chapter 7 petition, supported a finding of bad faith.