[CLBS] Ch. 7 with not primarily consumer debts and gifts

[Michael Jacques]

Hey everyone,

I have a client who wants to file a chapter 7 and has more than 50% of his debt as non-consumer debt.  My research leads me to believe the trustee can't succeed on a 707(b) motion because one of the prerequisites is the "primarily consumer debts" component.  However, I keep running into the In re Kelly by the 9th Circuit decision indicating that ability to fund a chapter 13 alone, is enough for a dismissal of a chapter 7 under abuse of discretion.

I believe my client can fund a chapter 13, so my first question is, "will he survive a motion to dismiss for abuse of discretion even though his debts are primarily business related?"

2nd issue:  My client has been making payments of about $1,000/mo on a mortgage debt that belongs to his mother-in-law.  The debt was originally incurred to fund his business interests, but there is no paperwork obligating him to the debt.  I think it will be classified as a gift and it has been going on for years.  Isn't that gift avoidable by the Trustee, and if so, under what code?

Thank you for any help.

Michael Jacques
JACQUES LAW
PH: (208) 344-2224
FX: (208) 287-4300

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