In In re Kulakowski, No. 12-15294, 2013 U.S. App. LEXIS 23110 (11th Cir. Nov. 15, 2013) (click here for .pdf of opinion), the issue was the extent to the Court could consider the income and expenses of the non-filing spouse in determining whether a Chapter 7 case could be dismissed for “substantial abuse” under 11 U.S.C. 707(b)(3)(B).  The basic facts are as follows: Debtor and her spouse have been married for over 20 years.  Debtor is unemployed, and they use her spouse’s income for their household expenses.  They have always operated as one “financial unit,” with joint checking, joint tax returns and pooling their income and expenses.  The spouse’s monthly take-home pay is $5,491, or $1,100 more than their household expenses.  Most of the debtor’s debt was credit card debt, much of which was incurred for household expenses or the sole benefit of the spouse.  The U.S. Trustee sought dismissal of the Chapter 7 case based on “substantial abuse.”  The Bankruptcy Court dismissed the case, and the District Court affirmed.  On appeal, the question before the 11th Circuit was the statutory interpretation of Section 707(b)(3)(B).

The Eleventh Circuit agreed with the dismissal of the case and analysis of the Bankruptcy Court.  The court rejected the debtor’s argument that her spouse’s income could only be considered to the extent he contributed to household expenses in determining “current monthly income” under §101(10A).

The term “current monthly income” figures largely in the so-called means test set forth in a neighboring provision of § 707. See 11 U.S.C. § 707(b)(2)(A)(i). Congress’ decision to include “current monthly income” as an explicit consideration under § 707(b)(2) but not to list it under § 707(b)(3) raises a rebuttable presumption that the omission from § 707(b)(3) was intentional. … Indeed, we have concluded that the totality of the circumstances test and the means test are not completely co-extensive. See In re Witcher, 702 F.3d at 623 (explaining that one’s ability to pay debts is a factor under the means test does not preclude a bankruptcy court from also considering it under the totality of the circumstances analysis).

We are not persuaded by Mrs. Kulakowski’s argument that the “specific and detailed” provisions of § 707(b)(2) pertaining to “current monthly income” overcome and subsume the broad and general language of § 707(b)(3)(B).  Although specific statutory provisions often trump more general ones, this presumption is not an absolute rule. Rather, the general/specific canon is simply an indication of statutory meaning that can be overcome by textual indications that point in the other direction.” … Few if any tests are as open-ended as the totality of the circumstances. The inherent flexibility and wide breadth of the totality of the circumstances inquiry, coupled with Congress’ decision not to include “current monthly income” as an explicit limiting factor under § 707(b)(3)(B), constitute sufficient textual evidence to overcome the general/specific canon. See Owusu-Ansah v. Coca-Cola Co., 715 F.3d 1306, 1312 (11th Cir. 2013) (“[C]ommon sense is not irrelevant in construing statutes[.]”). We cannot gainsay the language of § 707(b)(3)(B) and add words that Congress chose to omit such that the totality of the circumstances inquiry would be limited to consideration of a debtor’s “current monthly income.” See Harris v. Garner, 216 F.3d 970, 976 (11th Cir. 2000) (“We will not do to the statutory language what Congress did not do with it, because the role of [*1301] the judicial branch is to apply statutory language, not to rewrite it.”).

The Court then applied the statutory construction to the undisputed facts.

As we and other circuits have long observed, “[t]he cornerstone of the bankruptcy courts has always been the doing of equity.” … The Kulakowskis have been married for 21 years, share a joint checking account, file joint tax returns, jointly own their homestead, and pool their income and expenses. And, significantly, Mrs. Kulakowski incurred credit card debt during her marriage stemming in large part from charges that benefited the household generally and her husband specifically. Viewing this set of facts in the aggregate, we cannot say that the bankruptcy court, which analyzed the record under the broad framework of the totality of the circumstances test, abused its discretion in dismissing Mrs. Kulakowski’s Chapter 7 petition…  The bankruptcy court did not abuse its discretion in finding that it would be inequitable to disregard the income of Mr. Kulakowski, income which traditionally directly benefited Mrs. Kulakowski or indirectly benefited her by enriching her household, and which might instead just as readily serve to repay her creditors. Nor would fairness have been served by ignoring the fact that a substantial part of Mrs. Kulakowski’s debt benefitted her husband or her household at large. The bankruptcy court could reasonably conclude that allowing a bankruptcy to proceed under these facts could have created a de facto windfall for Mrs. Kulakowski at the expense of her creditors, a result that would run counter to the principles of equity and justness that underlie the Bankruptcy Code.

With this opinion, the Court has confirmed that the U.S. Trustee and other parties can dig deeper into the circumstances of married debtors to determine if there is “substantial abuse,” even where the debtor may qualify for Chapter 7 under the means test.