Stewart v. United States Trustee (In Re Stewart)

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
APR 22 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

In re JEFFREY D. STEWART,

Debtor.

-------------------------- No. 98-5000

JEFFREY D. STEWART,

Appellant,

v.

UNITED STATES TRUSTEE,

Appellee.

APPEAL FROM THE UNITED STATES
BANKRUPTCY APPELLATE PANEL
(BAP No. NO-97-010)
(N.D. Okla. No. 96-01624-W)

Richard A. Shallcross of Brewster, Shallcross & De Angelis, Tulsa, Oklahoma,
for Appellant.

Edward Himmelfarb (Frank W. Hunger, Assistant Attorney General, and William
Kanter, Department of Justice; Martha L. Davis, General Counsel; Jeanne M.
Crouse, Executive Office for United States Trustees, with him on the brief),
Washington, D.C., for Appellee.

Before BALDOCK, McKAY and BRORBY, Circuit Judges.
BRORBY, Circuit Judge.

Appellant Jeffrey D. Stewart appeals from the Bankruptcy Appellate

Panel’s (“the Panel”) decision affirming the dismissal of his Chapter 7 bankruptcy

petition. The bankruptcy court dismissed the petition pursuant to 11 U.S.C.

§ 707(b) for substantial abuse of the provisions of Chapter 7. In re Stewart, 201

B.R. 996 (Bankr. N.D. Okla. 1996) (Stewart I). In a related decision, the

bankruptcy court determined 11 U.S.C. § 707(b) is constitutional. In re Stewart,

204 B.R. 780 (Bankr. N.D. Okla. 1997) (Stewart II). On appeal, Dr. Stewart

challenges several rulings of the bankruptcy court as affirmed by the Panel. In Re

Stewart, 215 B.R. 456 (B.A.P. 10th Cir. 1997) (Stewart III). He contends the

bankruptcy judge erred in: (1) allowing the United States Trustee to commence a

§ 707(b) action for “substantial abuse” on the request or suggestion of his ex-

wife; (2) concluding his debts constituted “primarily consumer debts;” (3)

concluding the filing of his Chapter 7 petition constituted “substantial abuse” of

Chapter 7 provisions; and (4) holding § 707(b) is not void for vagueness and does

not violate the equal protection guarantees of the Fourteenth and Fifth

Amendments of the United States Constitution. We exercise our jurisdiction

under 28 U.S.C. § 158(d) and affirm.

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 I. BACKGROUND

Jeffery Stewart and Barbara Teichner married in 1978, and produced four

children. During this time, Mr. Stewart performed various odd jobs and

periodically attended college. They maintained a minimal standard of living,

relying in part on money provided by Barbara’s parents. Mr. Stewart also

obtained student loans from commercial lenders under government-sponsored

programs.

In 1988, Mr. Stewart entered medical school and became romantically

involved with another medical student, Patricia Hill. In 1990, he and Barbara

divorced. The marital settlement agreement required Mr. Stewart to: (1) pay

Barbara $500 monthly alimony until he completed his medical residency, and

$25,000 in annual alimony thereafter, with a cap of $2 million or in the event she

remarried, a cap of $250,000, and (2) pay child support totaling $2,000 per

month, as well as the children’s medical and future college expenses. In order to

meet these support obligations, Mr. Stewart borrowed over $100,000 in student

loans from 1990 to 1992, of which he gave Barbara $60,000 for support and paid

$3,000 toward the children’s medical expenses; the rest he spent on his living

expenses, tuition, and loan processing fees. Prior to, and independent from, the

divorce decree and marital settlement, Mr. Stewart agreed to sign two promissory

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notes to Barbara’s parents for $150,000 and $50,000 for loans they made to him

and Barbara during their twelve-year marriage.

In 1992, after graduating from medical school, Dr. Stewart began an

internship and residency program in obstetrics-gynecology. At the same time, he

ceased making support payments to Barbara and began a proceeding to vacate the

marital settlement agreement. Although Barbara defended the agreement and

counter-sued for past support, she agreed to reduce Dr. Stewart’s child support

obligation to $586.82 per month. In 1993, during the pendency of that lawsuit,

Barbara remarried. The same year, her father, Mr. Teichner, sued Dr. Stewart on

the $150,000 note in a state court proceeding.

In 1994, Patricia Hill began her medical residency. In 1995, she

successfully filed a voluntary petition for relief under Chapter 7. Later the same

year, she married Dr. Stewart.

In late 1995, while Dr. Stewart remained in arrears for approximately

$26,000 in past spousal support and unpaid medical bills for his children, he

purchased a 1990 Range Rover for $26,466. In January 1996, the state court

denied Dr. Stewart’s motion to vacate the divorce decree and granted Barbara a

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judgment of $26,077.95 for breach of the marital settlement agreement. In April

1996, the state court granted Mr. Teichner a judgment with interest against Dr.

Stewart on the $150,000 promissory note.

Just weeks after the divorce court denied his motion for a new trial, Dr.

Stewart filed his voluntary petition for relief under Chapter 7 and filed

bankruptcy schedules showing debt totaling $2,548,440.37. In this figure, Dr.

Stewart included a sum of $2 million owed Barbara under the marital settlement

agreement, rather than the $250,000 actually owed as a result of her remarriage.

Dr. Stewart sought discharge of: (1) all his debt obligations to his ex-wife and

her parents; (2) his children’s medical expenses; (3) all future, contractual post-

secondary education expenses for his four children; and (4) other incidental debts

including taxes and attorney fees. Dr. Stewart listed, but did not seek to

discharge, his student loan debt of $218,000. While Dr. Stewart listed himself as

“married,” he did not apportion his percentage of the total household expenses or

list his wife’s income. He listed his occupation as a “physician” at three

hospitals, with his monthly income totaling $3,358. He provided captions for the

legal proceedings involving Barbara and her father, but did not list the amount

owed to Barbara under the judgment against him. On his petition, Dr. Stewart

characterized his debts as non-business/consumer debts.

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 Days later, Barbara filed for relief from the automatic stay of the

bankruptcy, under 11 U.S.C. § 362, to allow her to enforce the terms of the

divorce decree, the marital settlement agreement and the judgment for support

arrears, and to modify child support. The bankruptcy court modified the stay to

allow Barbara to commence an action to collect and modify child support, and to

exercise her rights to enforce the judgment and take action in connection with Dr.

Stewart’s appeal of that judgment.

One month after filing his bankruptcy petition, Dr. Stewart completed his

residency program and opted to enter a two- to three-year fellowship program

specializing in perinatology rather than begin an obstetrics/gynecology practice.

His fellowship salary ranged from $34,292 to $37,000 a year. The monetary

consequences of his entering a fellowship are appreciable. Had Dr. Stewart

entered directly into practice rather than opting for a fellowship, his estimated

starting salary as a non-board-certified, perinatology graduate would have ranged

from $100,000 to $140,000 – substantially more than his fellowship. However,

on completing his fellowship, his estimated earning power increased substantially

with the average annual earnings for board-certified obstetrics/gynecology

specialists ranging between $175,000 and $325,00, and the highest salaries

exceeding $500,000. Dr. Stewart forewent immediate employment as an

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obstetrics/gynecology physician and instead chose specialization in the treatment

of high-risk pregnancies in order to “help desperately-ill and needy mothers and

babies,” and because he is “passionately interested in research” which he intends

to pursue “regardless of remuneration.” Stewart I, 201 B.R. at 1002.

In July 1996, Dr. Stewart submitted an amended petition. In amending his

schedules, Dr. Stewart slightly increased his expenses and decreased the value of

his assets; he also increased his liabilities to $2.6 million. He projected his

average monthly income from his new fellowship position at $3,403, and his

monthly expenses at $ 7,966, for a monthly deficit of $4,563. His revised

monthly expenses schedule reflected his share of the total household expenses,

but still did not list his wife’s income. He again characterized his debts as

nonbusiness/consumer debt. 1

Based on his revised schedule and after adjusting the inaccurate $2 million

1
At a subsequent hearing, Dr. Stewart testified his living expenses are
high because he rents an apartment in Oklahoma City while also renting a home in
Tulsa where his physician wife is in residency. He economized by dropping a
health club membership, trying to cut food and gas expenses, and dropping
disability insurance.

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alimony debt, Dr. Stewart’s actual total debt reached $837,009, 2 including

$250,000 marital debt, 3 $218,000 in student loans from commercial lenders,

$320,000 debt to his former in-laws 4, and $59,009 for other obligations including

medical bills for his children, attorney fees for litigation of his various suits, and

taxes. See Stewart III, 215 B.R. at 460. As to the debt owed to his in-laws, Dr.

Stewart testified his wife received her parents’ checks and used the money to

support the family while he attended school; she used the money on house

payments, groceries, pre-school, children’s activities, moving expenses, and

family vacations. Similarly, Barbara testified her parents loaned them money for

living expenses to maintain a “certain life style,” thus facilitating Dr. Stewart’s

education. She noted, however, her parents continued to support them even when

2
The schedules show total unsecured, nonpriority debt of $582,509 and,
after adjusting the $2 million alimony debt, a priority debt of $254,500, for a total
debt of $837,009. See Stewart III, 215 B.R. at 460 n.3.

3
The actual debt owed Barbara is $238,000, consisting of the $250,000
alimony award minus $12,000 alimony previously paid. This amount apparently
includes Barbara’s judgment against Dr. Stewart for $26,077.95 for unpaid
alimony and children’s medical expenses. The Bankruptcy Appellate Panel, for
the sake of simplicity, used the $250,000 figure in its calculations, stating the
same result occurs using either figure. Stewart III, 115 B.R. at 460 n.4. To avoid
confusion on appeal, we do the same.

4
This amount includes the judgment for the original $150,000 promissory
note to Mr. Teichner, and the $50,000 promissory note to Mrs. Teichner, both
with ten percent interest.

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Dr. Stewart did not attend college. 5

Ten days prior to the filing of Dr. Stewart’s amended petition, the United

States Trustee, through an Assistant Trustee, filed a motion to dismiss Dr.

Stewart’s petition under 11 U.S.C. § 707(b) as “substantial abuse” of Chapter 7.

The Trustee alleged Dr. Stewart’s sole purpose in filing for bankruptcy centered

on discharging marital and family obligations, even though he retained the ability

to pay a substantial portion of his debts.

In response, Dr. Stewart raised an affirmative defense that the motion was

“‘tainted’ by the request or suggestion made to the Trustee by a party-in-interest”

in violation of § 707(b). To support his affirmative defense, Dr. Stewart filed

interrogatories and a request for production demanding the Trustee produce

5
Dr. Stewart questions the credibility of his ex-wife’s testimony on this
subject, stating her testimony substantially differed from that in the proceeding
involving her father. Having read that portion of her bankruptcy testimony in
which Dr. Stewart’s counsel attempted to rebut it with her prior testimony, we
disagree her testimony substantially differed. Moreover, credibility
determinations are within the sound discretion of the trial judge. See Anderson v.
City of Bessemer City, 470 U.S. 564, 575 (1985). In this case, the bankruptcy
court relied on Barbara’s testimony that the money loaned by her parents went
toward facilitating Dr. Stewart’s education while maintaining the family in a
“certain life style” beyond their reach, thus evidencing the court’s belief her
testimony was credible. Stewart I, 201 B.R. at 1002.

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communications between the Trustee and the parties in interest, including

Barbara, her parents, or their representatives. Together with a motion to quash

the interrogatories and for a protective order, the Trustee filed a response to the

interrogatories, objecting on grounds Dr. Stewart was not entitled: (1) to

irrelevant information not calculated to lead to discovery of admissible evidence,

(2) to information subject to the deliberative process privilege, or (3) to probe the

mental process of government officials in reaching their decisions. Without

waiving these objections, the Trustee stated “he did not discuss this case with any

individual prior to filing the Motion to Dismiss.” In an amended response, the

Trustee omitted this statement. In a memorandum in support of the motion to

quash, the Trustee stated he “does not file any pleading, and particularly a motion

to dismiss a debtor’s petition for substantial abuse, without careful and

independent investigation, and certainly not merely at the request or suggestion of

a party in interest.”

The Trustee also responded to the request for production by producing

documents used as part of his investigation. They included Dr. Stewart’s

deposition and other documents from Mr. Teichner’s proceeding, various

transcripts from the bankruptcy proceeding, a variety of medical articles

concerning the expenses and income of physicians, and pleadings from the

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Stewarts’ divorce proceedings. The bankruptcy court granted the motion to quash

and struck Dr. Stewart’s “taint” defense on relevancy grounds, without ruling on

the privileged communications issue.

At the hearing on the Trustee’s motion to dismiss, Dr. Stewart made an

offer of proof concerning the “taint” allegedly caused by the Assistant Trustee’s

contact with his ex-wife and her attorney. The offer of proof asserted: (1)

creditors sent written and oral requests and documents to the Trustee’s office in

order to stimulate interest in § 707(b) “prosecution;” (2) his ex-wife and her

attorney inappropriately attended the 11 U.S.C. § 341 creditors’ meeting held

prior to the motion to dismiss; (3) at the meeting, her attorney asked Dr. Stewart

questions on issues directly related to a § 707(b) dismissal; and (4) his ex-wife,

her attorney, and the Assistant Trustee entered and left the meeting room

“together.” Dr. Stewart’s counsel further claimed the Trustee refused to

completely answer his discovery requests. The Trustee objected to the offer of

proof, stating Dr. Stewart provided no supporting evidence.

Following the hearing, the bankruptcy court granted the motion and

dismissed Dr. Stewart’s Chapter 7 petition for “substantial abuse.” Stewart I, 201

B.R. at 1008. In reviewing the dismissal, the Panel found the bankruptcy court

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relied on the following findings of fact in reaching the conclusion “substantial

abuse” occurred:

(1) Dr. Stewart and his doctor wife possess considerable future earning
potential;

(2) The student loan debts are not dischargeable, so the main effect of the
case is discharge of Dr. Stewart’s debts to his former wife, her parents, and
his children, which he appears to have “no intention of honoring;”

(3) Dr. Stewart exaggerated his debts and expenses and minimized his
income. While he was not required to include his non-debtor wife’s income
in his schedules, his failure to do so presented a “seriously misleading
picture of his actual financial status;”

(4) Dr. Stewart’s lifestyle was extravagant – “he spends $4,500 more than
he takes home every month”;

(5) His new wife obtained a Chapter 7 discharge under effectively
fraudulent circumstances just prior to marrying Dr. Stewart;

(6) Although Dr. Stewart is ineligible for Chapter 13 relief, Chapter 11 is
available to him;

(7) No emergency, disaster or untenable situation existed when he filed
bankruptcy; and

(8) Chapter 7 relief would result in little or no dividend to creditors, and
would amount to a reward for Dr. Stewart’s own financial improvidence
and judicial blessing of an unconscionably one-sided, opportunistic
adjustment of his relationship with his domestic creditors.

Stewart III, 215 B.R at 460-61 (quoting Stewart I, 201 B.R. at 1006-08).

On appeal to the Panel, Dr. Stewart contested the facts supporting findings

2, 3, 5 and 6. After review of the bankruptcy court’s findings, the Panel found

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support for finding 2, but agreed with Dr. Stewart and rejected findings 3, 5 and

6. Stewart III, 215 B.R. at 461-62.

I. STANDARD OF REVIEW

Dr. Stewart does not dispute the findings of fact as delineated by the

Bankruptcy Appellate Panel. Rather, he disputes the bankruptcy court’s and the

Panel’s conclusion that these facts show “substantial abuse” of Chapter 7

provisions. Dr. Stewart similarly disputes the bankruptcy court’s and the Panel’s

conclusion that his debts are “primarily consumer debts” and that the Trustee’s

motion to dismiss was not “tainted.” We review these legal determinations de

novo. See Williamson v. Kay (In re Villa West Assoc.), 146 F.3d 798, 802 (10th

Cir. 1998); Kornfeld v. Schwartz (In re Kornfield), 164 F.3d 778, 783 (2d Cir.

1999); First USA v. Lamanna (In re Lamanna), 153 F.3d 1, 3 (1st Cir. 1998).

Similarly, we review Dr. Stewart’s constitutional challenge to § 707(b) de novo.

See Johnston v. Cigna Corp., 14 F.3d 486, 489 (10th Cir. 1994), cert. denied, 514

U.S. 1082 (1995).

III. DISCUSSION

A. Taint

Having set out the pertinent facts and our standard of review, we turn to the

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issues presented on appeal. We begin with Dr. Stewart’s argument the bankruptcy

judge erred in granting the United States Trustee’s § 707(b) motion for dismissal

after the Trustee allegedly received a suggestion of abuse from Dr. Stewart’s ex-

wife. Alternatively, Dr. Stewart contends the Trustee failed to meet an

affirmative or mandatory burden of showing he conducted an independent

investigation prior to filing such a motion. The Trustee neither admits nor denies

an interested party made a request or suggestion of “substantial abuse,” but

contends under § 707(b), a United States Trustee can file a motion to dismiss a

petition “in the interest of the proper administration of the bankruptcy system”

notwithstanding any request or suggestion of a creditor.

We begin by examining the statute at issue. In 1984, Congress enacted 11

U.S.C. § 707(b), which, in pertinent part, stated:

After notice and a hearing, the court, on its own motion and not at
the request or suggestion of any party in interest, may dismiss a case
... [for] substantial abuse ....

(Emphasis added.) See Trustee v. Joseph (In re Joseph), 208 B.R. 55, 59 (B.A.P.

9th Cir. 1997) (quoting 1984 version of statute). Under this provision, the court

could dismiss a petition sua sponte, but arguably not at the request or suggestion

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of a party in interest. 6 However, this provision caused confusion over whether the

United States Trustee also could bring a § 707(b) motion. See In re Joseph, 208

B.R. at 59; see also In re Christian, 804 F.2d 46, 49 (3d Cir. 1986) (pre-1986

amendment case raising, but not deciding, issue of Trustee’s standing to bring

motion). To remedy any confusion, in 1986 Congress amended § 707(b), which

now reads:

After notice and a hearing, the court, on its own motion or on a
motion by the United States trustee, but not at the request or
suggestion of any party in interest, may dismiss a case ... [for]
substantial abuse ....

11 U.S.C. § 707(b) (emphasis added); see also Zolg v. Kelly (In re Kelly), 841

F.2d 908, 911-12 & n.2 (9th Cir. 1988) (citing the Bankruptcy Judges, United

States Trustees, and Family Farmer Bankruptcy Act of 1986, Pub. L. No. 99-554,

title II, § 219(b), 100 Stat. 3088, 3100 - 3101 (1986)).

Dr. Stewart contends the phrase “but not at the request or suggestion of any

party in interest” is unambiguous and modifies the phrase “on its own motion or

on a motion of the United States Trustee.” As a result, he argues § 707(b) clearly

6
But see In re Campbell, 63 B.R. 702, 705 (Bankr. W.D. Mo. 1986) (pre-
1986 amendment case holding suggestion of interested party made directly to
court does not mean “entire well is poisoned”; judge may make an independent
determination of substantial abuse, disregarding the suggestion made).

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prohibits the Trustee from filing a motion once a party in interest requests or

suggests such a motion. We disagree with this interpretation.

In considering the same issue, the Fourth Circuit determined the operative

phrase “but not at the request or suggestion of any party in interest” simply

modifies what the court can do, since “the court” is the subject of the sentence.

Trustee v. Clark (In re Clark), 927 F.2d 793, 797 (4th Cir. 1991); accord In re

Kornfield, 164 F.3d at 784. This construction is consistent with Congress’ 1986

amendment allowing the Trustee to bring a motion, but not changing the original

provision that the court may initiate a dismissal sua sponte, “but not at the request

or suggestion” of an interested party. As the Fourth Circuit stated:

This interpretation is bolstered by the fact that it does not
interfere with the purpose of § 707(b)’s provision that parties in
interest cannot address substantial abuse motions directly to the
bankruptcy court. The trustee’s ability to consider suggestions by
creditors will not result in harassment of debtors because the trustee
must make an independent judgment about whether it is appropriate
to file a § 707(b) motion to dismiss. Moreover, barring the trustee
from acting at the suggestion of a creditor could have the negative
effect of deterring interested persons from making relevant
information available to the trustee. This could impede significantly
the trustee’s obligation to investigate possibilities of substantial
abuse.

In re Clark, 927 F.2d at 797 (emphasis added) (citation omitted).

The Second Circuit similarly recognizes that § 707(b) suggestions made

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directly to the Trustee by interested parties are appropriate because “the

Bankruptcy Rules themselves implicitly recognize the legitimacy of such

participation” in the process. Kornfield, 164 F.3d at 784. This participation often

begins with the first meeting of creditors, where a Panel or Assistant Trustee may

collect sufficient information to spur the Trustee into filing a § 707(b) motion.

See In re Morris, 153 B.R. 559, 562 (Bankr. D. Or. 1993) (creditors attending

§ 341 creditors’ meeting are invited to ask the debtor specific questions about the

debtor’s financial affairs, which may trigger the Trustee to file a § 707(b)

motion). Under Dr. Stewart’s narrow interpretation of the statute, an interested

party’s participation at this or any time during the bankruptcy could be construed

as a “suggestion” automatically “tainting” the process so no dismissal may occur.

We agree that barring the Trustee from acting at the suggestion of a creditor could

deter interested persons from making relevant information available to the Trustee

and significantly impede the Trustee’s obligation to investigate possibilities of

substantial abuse. See In re Clark, 927 F.2d at 797.

We further note the record itself contained sufficient information to put the

Trustee on notice of Dr. Stewart’s possible abuse, without any suggestion or

assistance from Dr. Stewart’s ex-wife or her parents. For example, Dr. Stewart’s

initial petition and schedules showed enormous debt totaling over $2,500,000,

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consisting primarily of a $2 million debt to his ex-wife; the divorce documents,

however, showed an outstanding marital obligation of only $250,000. In

addition, while Dr. Stewart provided information of his married status, he did not

apportion his percentage of shared household expenses. Even though Dr. Stewart

truthfully listed his occupation as a “physician” and itemized his monthly income

as $39,600 a year, the fact a physician earned so little also could cause a Trustee

to question the veracity of the petition and investigate.

Dr. Stewart contends even if interested parties did not “taint” the process,

the Trustee nevertheless failed to show he conducted an “independent”

investigation of the alleged abuse “prior” to filing the motion to dismiss. As the

Panel noted, and we agree, the record demonstrates the Trustee undertook an

independent investigation concerning Dr. Stewart’s possible abuse of the

provisions of Chapter 7 prior to filing the motion to dismiss. See Stewart III, 215

B.R. at 463. This is substantiated by the documents the Trustee reviewed and

later provided to Dr. Stewart as a result of his request for production.

While the Trustee provided sufficient proof of his independent

investigation, this proof came after the Trustee filed the motion to dismiss. Dr.

Stewart reasons that the Trustee must prove an investigation was conducted

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before filing the § 707(b) motion. He relies on In re Morris, which summarily

states a Trustee filing a § 707(b) motion “must demonstrate that [he or she] has

independently investigated any allegations of substantial abuse prior to filing the

motion ... [and] [f]ailure to make this showing may result in the dismissal of the

motion.” 153 B.R. at 563. We do not believe the Morris court intended to

require that the showing be made prior to filing the motion, but rather that the

independent investigation must precede the motion. We find no supporting

authority and can think of no reasons to impose the requirement Dr. Stewart

suggests. It is sufficient for the Trustee to make such a showing after filing his or

her § 707(b) motion to dismiss. 7

Accordingly, we hold § 707(b) does not bar the United States Trustee, on a

request or suggestion from a party of interest, from investigating, reaching an

independent determination, and then filing a motion to dismiss for substantial

abuse. Accord In re Kornfield, 164 F.3d at 784; In re Clark, 927 F.2d at 796. As

the Trustee acted appropriately in this case, Dr. Stewart’s taint defense must fail.

7
This does not excuse the Trustee from carrying his or her burden in
supporting a motion to dismiss or from producing relevant and material
documents relied on in filing the motion to dismiss, at the behest of the debtor
who is preparing for a hearing on the motion.

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 B. Primarily Consumer Debt

We next turn to the issue of whether Dr. Stewart’s debt is “primarily

consumer debt.” Under § 707(b), a court “may dismiss a case filed by an

individual debtor ... whose debts are primarily consumer debts if it finds that the

granting of relief would be a substantial abuse of the provisions” of Chapter 7. 8

11 U.S.C. § 707(b) (emphasis added). The Bankruptcy Code defines “consumer

debt” as “debt incurred by an individual primarily for a personal, family, or

household purpose.” 11 U.S.C. § 101(8). Courts consistently have applied this

definition for the purposes of § 11 U.S.C. § 707(b). See In re Krohn, 886 F.2d at

126 (applying § 101(7) – the predecessor to § 101(8), which contained the same

language); In re Kelly, 841 F.2d at 912 (same); In re Booth, 858 F.2d 1051, 1054-

55 (5th Cir. 1988) (same). “Consumer debt” is further distinguished from “non-

consumer” debt as a debt incurred with a “profit motive.” Citizens Nat’l Bank v.

Burns (In re Burns), 894 F.2d 361, 363 (10th Cir. 1990); accord Cypher

Chiropractic Ctr. v. Runski (In re Runski), 102 F.3d 744, 747 (4th Cir. 1996); In

8
Congress promulgated § 707(b) as part of the 1984 consumer credit
amendments to the Bankruptcy Code. In re Krohn, 886 F.2d 123, 125-26 (6th Cir.
1989); see also In re Lamanna, 153 F.3d at 3-4. Congress passed these
amendments in response to an increasing number of Chapter 7 bankruptcies filed
each year by non-needy debtors. See In re Krohn, 886 F.2d at 125-26 (relying on
In re Walton, 866 F.2d 981, 983 (8th Cir. 1989)); In re Lamanna, 153 F.3d at 3-4
(relying also on In re Walton, 866 F.2d 981).

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re Booth, 858 F.2d at 1054-55.

In his initial and amended petition and schedules, Dr. Stewart categorized

his debt as “nonbusiness/consumer” debt. Notably, in response to the § 707(b)

motion to dismiss, Dr. Stewart seeks to recharacterize his debts as not “primarily

consumer debts” to avoid dismissal. In support of this recharacterization, he

argues he used the $320,000 owed his ex-in-laws and $218,000 owed in student

loans principally for financing his education; thus, those debts constitute “non-

consumer debt” incurred “for the purpose of completing a higher and professional

level of education.” As to the $250,000 owed his wife for alimony, he contends

this is not the kind of debt Congress envisioned when the consumer credit card

industry lobbied it to write § 707(b). 9 He admits, however, no published decision

supports his characterization of alimony as “non-consumer” debt.

In support of his argument, Dr. Stewart relies on two bankruptcy court

decisions, In re Gentri, 185 B.R. 368 (Bankr. M.D. Fla. 1995), and First Trust

Co. v. Frisch (In re Frisch), 76 B.R. 801 (Bankr. D. Colo. 1987), insisting we

9
While the credit card industry may have lobbied Congress to pass
§ 707(b), we note Congress did not expressly confine § 707(b)’s use to “credit
card” debt, thus giving the courts flexibility to determine potential abuse beyond
credit card misuse.

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must follow a per se rule that monies received by a debtor from his father-in-law

constitute “non-consumer” debt. Despite Dr. Stewart’s insistence, these cases are

distinguishable and constitute non-persuasive, non-binding authority. The court

in both cases failed to examine the purpose for which the debtor incurred the

loans. In Gentri, the court based its finding that medical education loans to the

debtor from his former father-in-law constituted “business debt” solely on the

Trustee’s admission of that characterization. 185 B.R. at 373. In Frisch, the

court summarily concluded an intra-family loan between the debtor and his former

father-in-law was not “consumer debt” in light of the creditor’s failure to provide

any authority for the proposition intra-family loans constitute consumer debt. 76

B.R. at 803.

Unlike these cases, the record in this case shows the actual purpose for

which Dr. Stewart used the intra-family loans. In fact, Dr. Stewart’s own

testimony supports the finding he used the money predominantly for family living

expenses rather than for direct educational costs. Stewart III, 215 B.R. at 465.

Dr. Stewart testified his ex-wife used the money to support their family, including

use for house payments, groceries, pre-school, children’s activities, moving

expenses, and family vacations. Nothing in the record convinces us the main

purpose of these loans was to finance Dr. Stewart’s actual educational expenses.

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Rather, Dr. Stewart used the money to support his family because he did not earn

enough for his family to live comfortably. Notably, this support continued even

during those times when Dr. Stewart did not attend college. Thus, the intra-

family loans Dr. Stewart received for household and family expenses are

“consumer debt.”

The Panel concluded Dr. Stewart’s student loans totaling $218,000

constitute “consumer debt” because the money was used for dual family and

personal purposes. Due to the lack of evidence in the record and authority to

guide us, we are unwilling to characterize the entire $218,000 as consumer debt.

However, based on the evidence in the record, we can comfortably conclude a

substantial portion of Dr. Stewart’s student loan debt is indeed “consumer debt.”

We start by noting nothing in the record indicates the actual cost of Dr.

Stewart’s tuition, books, or other direct educational expenses as compared to the

portion of student loans used for personal, family, and household expenses.

Moreover, little or no binding or persuasive authority exists to help us determine

the characterization of educational expenses such as books, tuition, and room and

-23-
board as either consumer or business debt. 10

The record does, however, establish a substantial amount of Dr. Stewart’s

loans went toward his family’s expenses. As to student loans received during

their marriage, Dr. Stewart’s testimony, read in its entirety, together with his brief

on appeal, establishes he used a portion of the money on family expenses in

addition to any direct educational costs. Specifically, in his brief, Dr. Stewart

admits he used his student loan money during his marriage to pay for tuition and

books as well as to support “his five dependents.” Finally, the record shows

during the two years following their divorce, Dr. Stewart obtained over $100,000

in student loans, paying Barbara $60,000 of it for support obligations and $3,000

on his children’s medical expenses. Under these circumstances, an appreciable

portion – $63,000 – of his student loans went toward family expenses, which

fairly may be characterized as “consumer debt.”

Finally, as to the alimony debt of $250,000, the weight of the case law on

this issue conclusively shows it is a “consumer debt” if it is based on a non-profit

10
Dr. Stewart testified the student loans received prior to his 1978
marriage went solely toward tuition, books, and room and board. However, the
record shows he received only $660 in student loans prior to that time. This is a
mere fraction of the $218,000 owed on student loans.

-24-
motive. See, e.g., In re Kestell, 99 F.3d 146, 149 (4th Cir. 1996) (alimony, child

support, and lump-sum award are considered “consumer debt” as they were not

incurred with a profit motive or in connection with a business transaction); In re

Traub, 140 B.R. 286, 290 (Bankr. D. N.M. 1992) (property settlement owed ex-

wife is consumer debt as it is a distribution of the net value of the community

interest of the debtor’s medical practice and not owed because of a profit-seeking

activity); In re Palmer, 117 B.R. 443, 447 (Bankr. N.D. Iowa 1990) (lump-sum

alimony award is consumer debt because the debt was created to allow the debtor

to retain ownership of the home and his pension). In this case, the weight of the

evidence suggests the alimony owed to Dr. Stewart’s ex-wife is for her support

and benefit, and not for any profit motive. Therefore, it constitutes “consumer

debt” for the purposes of § 707(b).

Having conclusively determined the debt owed Dr. Stewart’s ex-wife and

her parents, and at least a portion of the student loan debt, are “consumer debt,”

we next must determine whether Dr. Stewart’s total debt is primarily “consumer

debt” for the purposes of a § 707(b) dismissal. Dr. Stewart suggests that even if

some of the debt owed to his creditors is “consumer debt” it is not “primarily”

consumer debt as required under § 707(b). Dr. Stewart suggests “primarily”

means the overall “ratio” of “consumer debt” to “total debt” must exceed fifty

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percent.

The Bankruptcy Code does not define “primarily,” and only a few of our

sister circuits have defined “primarily” under § 707(b). Noting the word

“primarily” is not an ambiguous or difficult word to understand, and is defined in

Webster’s Dictionary as “for the most part,” the Ninth Circuit determined it to

mean consumer debt must exceed more than half the total debt for dismissal under

§ 707(b). See In re Kelly, 841 F.2d at 913, 916. 11 In a non-bankruptcy context,

we similarly defined “primarily” as meaning more than fifty percent. Bohn v.

Park City Group, Inc., 94 F.3d 1457, 1461 (10th Cir. 1996) (recognizing the

Department of Labor, as a “good rule of thumb,” defines “primary duty” to mean

the major part, or over fifty percent, of the employee’s time). Finding no cases to

the contrary, we therefore define “primarily” in the context of § 707(b) as

meaning consumer debt exceeding fifty percent of the total debt.

11
The Fifth Circuit agrees, but goes one step further by also requiring that
the actual number of individual consumer debts must exceed at least half the total
number of debts. See In re Booth, 858 F.2d at 1055. In other words, even if the
debt owed to one creditor is “consumer debt” and constitutes ninety-nine percent
of the entire debt, if the remainder of the debt is owed to ten other creditors, the
total debt is not “primarily” “consumer debt.” Believing this requirement is
illogical, we reject it.

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 Applying this definition to the instant case, Dr. Stewart’s actual total debt

is $837,009. Of that amount, $633,000 is “consumer debt” ($320,000 owed to his

former in-laws, at least $63,000 of the $218,000 in student loan debt, and

$250,000 in alimony). This amount exceeds fifty percent of the total debt.

Hence, we determine Dr. Stewart’s debt is “primarily consumer debt” for the

purposes of § 707(b), and, therefore, his petition may be dismissed under

§ 707(b), but only if substantial abuse occurred.

C. Substantial Abuse

Under the provisions of § 707(b), a court “may dismiss a case filed by an

individual debtor ... if it finds that the granting of relief would be a substantial

abuse of the provisions” of Chapter 7. See 11 U.S.C. 707(b) (emphasis added).

The bankruptcy statutes do not define “substantial abuse,” and this court has

never undertaken to define the phrase in the context of § 707(b). Consequently,

we look to other circuits, which agree the debtor’s ability to repay his debts out of

future earnings is a primary factor in determining if substantial abuse occurred.

See In re Kornfield, 164 F.3d at 784; In re Lamanna, 153 F.3d at 4-5; In re Koch,

109 F.3d 1285, 1288 (8th Cir. 1997); In re Green, 934 F.2d 568, 572 (4th Cir.

1991); In re Krohn, 886 F.2d at 126; In re Kelly, 841 F.2d at 914. To a certain

degree, however, these courts differ on what, if any, other factors should be

-27-
considered in determining if “substantial abuse” occurred.

Some courts regard ability to repay debt as dispositive in determining

whether substantial abuse occurred. See In re Kelly, 841 F.2d at 914-15 (only

factor overriding primary factor of inability to pay is “bad faith”); In re Koch, 109

F.3d at 1288 (substantial ability to repay, measured by the debtor’s ability to

repay debts under a hypothetical Chapter 13 filing, alone is sufficient to warrant a

§ 707(b) dismissal).

The Fourth Circuit relies on a “totality of the circumstances” standard. See

In re Green, 934 F.2d at 572-73. It believes that while the debtor’s ability to

repay his debts is a primary factor, other factors must be considered. Id. These

other factors include, but are not limited to: (1) sudden illness, calamity,

disability, or unemployment; (2) cash advances and consumer purchases in far

excess of ability to repay; (3) excessive or unreasonable family budget; (4)

accurate reflection of true financial condition in the debtor’s schedules and

statements of income and expenses; and (5) the debtor’s good faith. Id.

Other courts appear to use a hybrid standard. They believe the debtor’s

ability to pay may alone be sufficient to warrant dismissal, but in evaluating the

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“totality of the circumstances,” acknowledge it may be appropriate to consider

other relevant factors. See In Re Lamanna, 153 F.3d at 5; In re Krohn, 886 F.2d

at 126. Those factors may include: (1) whether the debtor enjoys a stable source

of future income; (2) whether the debtor is eligible for adjustment of debt through

Chapter 13; (3) whether state remedies exist to ease the financial predicament; (4)

the degree of relief obtainable through private negotiation; and (5) whether the

debtor’s expenses can be significantly reduced without depriving him of adequate

food, clothing, shelter and other necessities. See In re Krohn, 886 F.2d at 126-27;

In re Lamanna, 153 F.3d at 4-5 (factors in Krohn regarded as nonexclusive list of

relevant considerations).

After careful consideration, we adopt the “totality of the circumstances”

standard. While we agree ability to pay is a primary factor in determining

whether “substantial abuse”occurred, we believe other relevant or contributing

factors, such as unique hardships, must also be examined before dismissing a

Chapter 7 petition. Conversely, where an inability to pay exists, we believe other

factors may nevertheless establish substantial abuse. We recognize the factors

articulated by the other courts as instructive, but conclude they are not inclusive

of all factors considered. A substantial-abuse analysis must be made on a case-

by-case basis.

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 In applying this standard, we begin by looking at whether Dr. Stewart can

repay his debts. See In re Green, 934 F.2d at 572. During his fellowship, Dr.

Stewart’s monthly expenses of $8,000 clearly exceeded his income of $3,400, so

his ability to repay his debt was greatly diminished for the two- to three-year

length of his fellowship. However, having instead chosen and then completed his

fellowship, Dr. Stewart’s earning potential increased to $175,000 - $325,000 a

year, so his monthly earning potential well exceeds his monthly expenses. 12

Hence, Dr. Stewart possesses the financial ability to pay his expenses and repay

his debt within a reasonable time. See In re Kornfield, 164 F.3d at 784. Seeking

a discharge of debt under these circumstances evidences “substantial abuse” under

§ 707(b).

Under the “totality of the circumstances” standard, we must also look at

other relevant factors to see if “substantial abuse” occurred. One factor to

consider is whether Dr. Stewart suffered any unique hardships, such as sudden

illness, calamity, disability, or unemployment. See In re Green, 934 F.2d at 572-

73. He did not. Dr. Stewart suffered no emergency, disaster, or untenable

situation when he filed his bankruptcy petition. Stewart I, 201 B.R. at 1007;

12
At oral argument, counsel for the Trustee noted Dr. Stewart successfully
completed his fellowship.

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Stewart III, 215 B.R. at 461. Another factor is whether his cash advances and

consumer purchases far exceeded his ability to pay at that time. Id. They did.

Dr. Stewart lived an extravagant lifestyle, spending $4,500 more than his monthly

take-home pay. Stewart I, 201 B.R. at 1007; Stewart III, 215 B.R. at 461. 13

Bankruptcy relief is not intended to remedy the consequences of extravagant

spending.

Another factor to consider is whether Dr. Stewart will enjoy a stable source

of future income. See In re Krohn, 886 F.2d at 126-27. This factor is met

through Dr. Stewart’s successful completion of his fellowship and resulting

appreciable earning power as a specialty physician. The next factor is whether

Dr. Stewart’s expenses can be significantly reduced without depriving him of

adequate food, clothing, shelter, and other necessities. Id. Dr. Stewart’s actual

expenses are clearly excessive and can be reduced. See Stewart III, 215 B.R. at

462. Moreover, given his current earning power, even these excessive expenses

13
The bankruptcy court and Panel disagreed on whether Dr. Stewart’s
petition and schedules accurately reflected his true financial condition. Compare
Stewart I, 201 B.R. at 1006 with Stewart III, 215 B.R. at 461. This is another
factor to consider under “the totality of the circumstances” standard. See In Re
Green, 934 F.2d at 572-73. Regardless of which position is correct, under “the
totality of the circumstances,” other factors we consider sufficiently establish
“substantial abuse.”

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can clearly be met without depriving him of any necessities. We further note Dr.

Stewart does not qualify for Chapter 13 relief, see id., which weighs against

dismissal. See In re Kohn, 886 F.2d at 126-27. However, Dr. Stewart fails to

show he is unable to obtain relief through private negotiation, which weighs in

favor of dismissal. See id.

Finally, we look to the debtor’s good faith as a factor under “the totality of

the circumstances.” See In re Green, 934 F.2d at 572-73. We note Dr. Stewart

filed his petition immediately after unsuccessful litigation with his wife and

former father-in-law in an attempt to discharge judgments he is legally obligated

to pay. Ironically, he also seeks to discharge his legal obligation to pay his

children’s college expenses even though his in-laws provided him money over a

twelve-year period so he could pursue his own education. Moreover, he now

attempts to discharge those intra-family loans.

Just as ironic is Dr. Stewart’s contention he opted for a low-paying

fellowship for the humanitarian reason of servicing needy children and mothers,

while disregarding his own children’s medical expenses and the financial support

of their mother. In fact, Dr. Stewart purchased a $26,000 vehicle rather than pay

these expenses at the time they became due and owing. In filing his petition, Dr.

-32-
Stewart sought discharge of his family obligations, while (1) pursuing a

fellowship that paid substantially less than his earning potential, and (2) knowing

he could, and now will, enjoy a substantially higher income. We are reminded of

the old adage, “having your cake, and eating it too.” Indeed, under “the totality

of the circumstances,” we question Dr. Stewart’s good faith in filing his petition

and conclude his actions constitute “substantial abuse” within the meaning of

§ 707(b). For these reasons, the bankruptcy court correctly dismissed his petition

under § 707(b).

D. Constitutionality

As an alternative argument, Dr. Stewart asserts § 707(b) is unconstitutional

because it is (1) void for vagueness and (2) in derogation of the equal protection

guarantees of the Fourteenth and Fifth Amendments. Specifically, Dr. Stewart

laments the words “substantial abuse” and “primarily consumer debts” are so

vague as to render the statute meaningless and unenforceable. Dr. Stewart further

contends no “rational basis” exists for Congress to choose to discriminate against

only consumer debtors under § 707(b), to the exclusion of business debtors.

Section 707(b) has survived similar constitutional challenges in the Ninth

Circuit and several bankruptcy courts in this and other circuits. See In re Kelly,

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841 F.2d at 916-17 (challenged for vagueness); Heller v. Foulston (In re Heller),

160 B.R. 655, 661 (Bankr. D. Kan. 1993) (same); In re Higginbotham, 111 B.R.

955, 965 (Bankr. N.D. Okla. 1990) (challenged for vagueness and violation of

equal protection guarantees); In re Wilkes, 114 B.R. 551, 553 (Bankr. W.D. Tenn.

1989) (reviewed for vagueness and violation of due process and equal protection

guarantees); In re Keniston, 85 B.R. 202, 204-05 (Bankr. D. N.H. 1988) (same).

One of the main purposes of bankruptcy law is to relieve honest debtors

from the weight of oppressive indebtedness, thereby allowing them to start afresh.

See In re Krohn, 886 F.2d at 125. While Congress promulgated bankruptcy laws

to assist needy debtors, a constitutional right to bankruptcy discharge does not

exist. United States v. Kras, 409 U.S. 434, 446 (1973). Bankruptcy laws

regulating economic activity do not involve constitutionally protected conduct

and, thus, are subject to “a quite lenient test for constitutional sufficiency.” In re

Kelly, 841 F.2d at 915 (considering constitutionality of § 707(b)). See also Kras,

409 U.S. at 446; Otasco, Inc. v. United States (In re South), 689 F.2d 162, 165

(10th Cir. 1982), cert. denied, 460 U.S. 1069 (1983). With this in mind, we

proceed to the constitutional issues raised.

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 1. Vagueness

Because discharge in bankruptcy is not a constitutional right and is only a

civil remedy afforded by statute, we agree that “civil statues, such as § 707(b), are

subject to less rigorous constitutional standards than criminal statutes, and ...

where First Amendment freedoms are not concerned, the rule is that a statute is

unconstitutionally vague ... [when] ‘no standard of conduct is specified at all.’”

Stewart III, 215 B.R. at 464 (quoting Higginbotham, 111 B.R. at 965.)

We further agree § 707(b) does in fact provide a standard of conduct, “even

though the details must be worked out by judicial decisions.” Id. Section 707(b)

derives “much meaningful content from [its legislative purpose], its factual

background, and the statutory context.” In re Kelly, 841 F.2d at 916 (internal

quotation marks and citation omitted). The fact that § 707(b) does not define the

terms “primarily” or “substantial abuse,” does not make the provision

constitutionally void. As the Kelly court noted, “[t]he Constitution does not

require the legislature to incorporate Webster’s into each statute in order to

insulate it from vagueness challenges.” Id. While § 707(b) unavoidably subjects

debtors to judicial differences of opinion, we agree “it does not subject them to

judicial whim without ‘guidance or constraint.’” Higginbotham, 111 B.R. at 966

(quoting Yick Wo v. Hopkins, 118 U.S. 356, 367 (1886)). Indeed, case law

-35-
reflects the bankruptcy courts have had little difficulty fashioning a relatively

uniform approach to resolving § 707(b) motions. See Kelly, 841 F.2d at 916. For

these reasons, we conclude § 707(b) is not constitutionally void for vagueness.

2. Equal Protection

The bankruptcy court, applying a “rational basis” standard, held § 707(b)

does not violate the equal protection provisions of the Constitution. Stewart II,

204 B.R. at 782. However, in reviewing the bankruptcy court’s decision, the

Panel avoided the equal protection issue by construing the statute no more broadly

than other statutes that generally permit dismissal of bankruptcy petitions. 14

Stewart III, 215 B.R. at 463-64. The Panel concluded, without giving thorough,

delineated examples, that the case-by-case analysis applied to motions to dismiss

under § 707(b) is substantially similar to the case-by-case analysis given dismissal

motions under other, more general bankruptcy provisions that apply to business

debtors.

14
The Panel compared § 707(b) motions to dismiss with motions to dismiss
under 11 U.S.C. §§ 105 and 707(a). These statutes give bankruptcy courts
general jurisdiction to dismiss abusive petitions under other provisions of the
Bankruptcy Code, without regard to classification. See, e.g., 11 U.S.C. § 105
(granting courts sua sponte power to “prevent an abuse of process”), and 11
U.S.C. § 707(a) (granting general jurisdiction to dismiss petitions, but not
specifically mentioning “abuse”); see also Stewart II, 204 B.R. at 782.

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 On appeal, the Trustee asserts an equal protection analysis is necessary

because a difference does exist between the treatment of consumer and business

debtors under the bankruptcy code. The Trustee contends a rational basis exists

justifying the dissimilar treatment given consumer and business debtors.

We acknowledge those cases instructing us to avoid resolution of the

constitutionality of a statute if a reasonable, alternative statutory interpretation

poses no constitutional question. See Hall v. Commissioner of Internal Revenue,

30 F.3d 1304, 1306 (10th Cir. 1994); Turner v. United States Parole Comm’n, 934

F.2d 254, 257 (10th Cir.), cert. denied, 502 U.S. 885 (1991). However, where, as

here, the legislature clearly intended to separately classify consumer debtors, and

the constitutional issue can be easily resolved, we determine it more prudent to

resolve the constitutional issue than “press statutory construction ‘to the point of

disingenuous evasion.’” United States v. Locke, 471 U.S. 84, 96 (1985) (quoting

George Moore Ice Cream Co. v. Rose, 289 U.S. 373, 379 (1933)). Specifically,

we find it prudent to refrain from applying a statutory interpretation that might

pervert the clear purpose of § 707(b) to separately classify consumer debtors and

broaden the judiciary’s ability to dismiss consumer petitions for substantial abuse.

Cf. Heckler v. Mathews, 465 U.S. 728, 741-42 (1984). Therefore, we proceed to

the constitutional issue and review § 707(b) to determine if it impermissibly

-37-
discriminates against consumer debtors in violation of the equal protection

provisions of the Constitution.

We review § 707(b) and its distinction between consumer and business

debtors under a “rational basis” analysis. This is because the distinction between

consumer and business debtors does not implicate a fundamental right or affect a

suspect classification. See generally Kras, 409 U.S. at 446 (finding “bankruptcy

legislation is in the area of economics and social welfare,” and no constitutional

right exists to obtain a discharge of one’s debts in bankruptcy). A classification

involving neither a fundamental right nor a proceeding along suspect lines is

accorded a strong presumption of validity. Heller v. Doe, 509 U.S. 312, 319

(1993). “A statute is presumed constitutional ... and ‘[t]he burden is on the one

attacking the legislative arrangement to negative every conceivable basis which

might support it.’” Id. at 320 (quoting Lehnhausen v. Lake Shore Auto Parts Co.,

410 U.S. 356, 364 (1973)).

Keeping § 707(b)’s strong presumption of validity in mind, we must

determine if a rational relationship exists between the disparity of treatment

between consumer and business debtors and some legitimate governmental

purpose. Heller, 509 U.S. at 320. Section 707(b) must be upheld against Dr.

-38-
Stewart’s equal protection challenge if “any reasonably conceivable state of

facts” exists providing a rational basis for the separate classification of consumer

and business debtors. FCC v. Beach Communications, Inc., 508 U.S. 307, 313

(1993). An economic classification such as that applied in § 707(b) does not fail

rational basis review merely because in practice it results in some inequality. See

Dandridge v. Williams, 397 U.S. 471, 485 (1970).

Congress enacted § 707(b) for two reasons. First, it wanted to address the

problem of consumer debtors taking inordinate advantage of modern easy-credit

practices, running up consumer debt, and then seeking discharge of that debt

through Chapter 7 bankruptcy. See In re Lamanna, 153 F.3d at 3. Congress

apparently felt § 707(b) would remedy the problem of consumer debtors unfairly

taking advantage of Chapter 7 even though they are able over time to pay off their

debts. See id.; In re Kornfield, 164 F.3d at 781. Second, Congress wanted to give

the courts a specific mechanism to more readily dismiss petitions by abusive

consumer debtors. As the bankruptcy court aptly noted, § 707(b) was not enacted

to narrow and discourage court review of abuse cases to those involving consumer

debt, but to broaden and encourage such review in light of the fact many

bankruptcy courts were not dismissing abusive consumer petitions. Stewart II,

204 B.R. at 781-82. Thus, “[s]ection 707(b) was enacted in response to ...

-39-
judicial abdication of authority.” Id.

Congress’ legitimate concern over consumer abuse of Chapter 7 continues

today given easy-credit practices involving signature loans and credit cards. As

the bankruptcy court in this case reasoned, § 707(b) addresses a type of

bankruptcy case – consumer debt – especially liable to abuse and deserving

review. Id. at 782.

That type of case involves an individual debtor who ... takes
advantage of modern easy-credit practices to accumulate debts, for
the immediate purpose of satisfying his private appetites and
maintaining or enhancing his personal qualities and lifestyle, or those
of his dependents – often in circumstances which offer creditors little
security, because the benefits acquired by the debts are used up
(“consumed”) by the debtor himself and assimilated to his person –
and who effectively avoids repayment by keeping his unconsumed
property and his income from wages or professional earnings to
himself and from his creditors....

Stewart I, 201 B.R. at 1004. While consumer debtors for the most part

“consume” the benefits acquired by their debt, it is reasonable to assume most

business debtors accrue debt to obtain tangible, secured business assets, which

thereby gives creditors more protection in recovering those assets and conceivably

lessens the possibility of bankruptcy abuse. Therefore, in enacting § 707(b),

Congress addressed the more immediate concern it had with consumer abuse of

Chapter 7 and the bankruptcy courts’ failure to dismiss abusive consumer

petitions. In doing so, it was not necessary for Congress to similarly address

-40-
business debtor abuse. See, e.g., Dandridge, 397 U.S. at 486-87; Williamson v.

Lee Optical of Okla., 348 U.S. 483, 489 (1955).

Based on the above, we conclude a “reasonably conceivable state of facts”

exists providing a rational basis for the separate classification and treatment of

consumer and business debtors under 11 U.S.C. § 707. Specifically, we find it

reasonable Congress enacted § 707(b) to counter Chapter 7 abuse by consumers

who amass debt through easy credit practices, consume the items purchased, and

then seek discharge of their debt even when able to pay. A rational relationship

exists between Congress singling out consumer debtors for dismissal for

substantial abuse under § 707(b) and the government’s legitimate purpose in

preventing consumer abuse, reasonably protecting creditors and empowering the

courts with a mechanism to more readily dismiss substantially abusive consumer

petitions. Accordingly, we hold 11 U.S.C. § 707(b) does not violate the equal

protection provisions of the Constitution.

For the foregoing reasons, we AFFIRM the dismissal of Dr. Stewart’s

Chapter 7 petition for substantial abuse.

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