What Is Section 707?
Section 707 of Title 11 of the United States Code (Dismissal of a Case or Conversion) is a foundational provision of the Bankruptcy Code. It governs when a Chapter 7 case can be dismissed -- either for cause under 707(a) or for abuse under 707(b). This section is the primary gatekeeper that determines whether a debtor can proceed with Chapter 7 liquidation or must convert to Chapter 13.
Official citation: 11 U.S.C. § 707
Key Provisions of Section 707
Section 707 has three main subsections:
- 707(a) -- Dismissal for Cause: The court may dismiss a Chapter 7 case for cause, including unreasonable delay prejudicial to creditors, nonpayment of filing fees, or failure to file required documents within the time allowed (such as credit counseling certificates, pay stubs, or tax returns).
- 707(b)(1) -- Presumption of Abuse: If the debtor's income exceeds the state median, the means test (Form 122A-2) determines whether a presumption of abuse arises. If the debtor has sufficient disposable income to fund a meaningful repayment plan, the case is presumptively abusive.
- 707(b)(3) -- Totality of Circumstances: Even if the debtor passes the means test, the court can dismiss the case if the totality of circumstances demonstrates abuse. This looks at the debtor's overall financial picture -- high income, low expenses, ability to pay, and bad faith conduct.
Who can raise 707(b)? The U.S. Trustee, bankruptcy trustee, or any party in interest (including creditors) can file a motion to dismiss under 707(b). The court can also raise it sua sponte (on its own).
How This Affects You
Section 707 matters for several reasons:
- Means test gateway: If your current monthly income exceeds your state's median income for your household size, you must pass the means test or face dismissal. This is calculated using the 6-month lookback period before filing.
- Strategic timing: Because the means test uses a 6-month average, timing your filing can matter. If you recently lost a job, waiting until high-income months fall outside the lookback window may help you pass.
- Conversion option: If the court finds abuse, it does not simply dismiss your case -- you have the right to convert to Chapter 13 instead of having the case dismissed entirely.
- Special circumstances: The means test includes a "special circumstances" rebuttal. Serious medical conditions, military service, and other documented extraordinary expenses can overcome the presumption of abuse.
Practical tip: If you are close to the means test line, document every legitimate expense carefully. Secured debt payments, child support, health insurance, and mandatory payroll deductions all reduce disposable income. A small change in documented expenses can mean the difference between passing and failing.
Related Bankruptcy Code Sections
Section 707 works in conjunction with several other provisions of the Bankruptcy Code:
- Section 109 -- Eligibility to file (must meet before 707 applies)
- Section 707(b)(2) -- The Means Test (detailed calculation)
- Section 1112 -- Conversion or dismissal in Chapter 11
- Section 521 -- Debtor duties (failure triggers 707(a) dismissal)
Understanding how these sections interact is critical for anyone navigating the bankruptcy process, whether as a debtor, creditor, or attorney.
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