Moreland Bankruptcy - Memorandum Opinion (2005-08-03)
Here's the CNN Headline News version: North Carolina couple (the Morelands) earned over $100k per year from 2001 thru 2003. Year 2004 saw their household gross drop to $72k, thanks to an extended bout of unemployment followed by rehire at a job which paid about $30k per year less than the previous. The couple had purchased a home for $178k in 1997; by 2005, they still lived in that same home (2700 sq. feet on 3.7 acres), but owed $243k on it. (The couple had no children or dependents.) In addition, they had racked up $139,639 in unsecured debts, most of which resided on seventeen credit cards.
The couple filed for Chapter 7 bankruptcy in February 2005. At that time, they had a net monthly income of $4977, and monthly expenses of $4793. Housing expenses alone absorbed 52 percent of their monthly take-home pay.
The Bankruptcy Administrator in the case suggested that the couple's Chapter 7 petition amounted to an abuse of the bankruptcy system, thanks to their history of "wanton spending" and "excessive housing expense." The judge agreed, directed the couple to sell their home and rent an apartment in order to save money to repay creditors, and dismissed the case.
All in all, the PDF is a really interesting read. It's also more succinctly-worded than most court documents, without a ton of legal jargon. It's a great look at what can happen when overspending and fairly presumptuous debtors run headlong into a judge with some court integrity to uphold.