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Bankruptcy dismissal upheld

Robert and Karen Kornfield may not use the Chapter 7 bankruptcy law to get out of paying debts for their extravagant lifestyle, a federal court judge ruled today.
U.S. District Chief Judge David Larimer affirmed Bankruptcy Judge John Ninfo II’s decision to dismiss the Kornfield case on the grounds of “substantial abuse.”
Robert Kornfield is a doctor who earned $400,000 a year and had a pension plan worth nearly as much when he and his wife filed a Chapter 7 petition on July 30, 1996.
Chapter 7 allows filers to keep some assets and sell off others to pay debts. When creditors are paid, often only a portion of the amounts owed, filers are cleared.
Ninfo determined, after examining the facts and circumstances of the case, that the Kornfields had many options open to them other than filing for Chapter 7 at the expense of their creditors.
His dismissal of the Kornfields’ petition, and another one this summer, provoked a host of speculation in the local legal community that debtors would find judges less lenient than in the past.
In the Kornfield case, Larimer concurred that the filers did not require special protection from their creditors.
“A fresh start is not the same thing as a `free ride,’ ” Larimer wrote in his decision, “which is what Judge Ninfo was concerned with preventing here, to the detriment of the appellants’ creditors. I agree with Judge Ninfo’s assessment of this case and conclude, as did he, that dismissal for substantial abuse was entirely justified in this case.”
Kornfield and his wife and children had expenses of $3,000 a month in rent, $1,200 for food, and $400 for clothing. The couple owed more than $500,000 on two mortgages on a previously owned and foreclosed home, and $34,000 in credit-card purchases.
When Ninfo threw out their petition, they appealed the decision on Aug. 1, citing purported procedural errors as well as claiming their due-process rights were violated.
Larimer found no basis for any of their claims, noting that the “substantial abuse” provision is “aimed primarily at stemming the use of Chapter 7 relief by unneedy debtors.”
At several points in his decision, Larimer derided the Kornfields’ claims that their rights were violated, noting, for example, that “appellants’ contention that the extension motion affected a constitutionally protected liberty or property interest borders on the ludicrous.”

Bankruptcy dismissal upheld

Robert and Karen Kornfield may not use the Chapter 7 bankruptcy law to get out of paying debts for their extravagant lifestyle, a federal court judge ruled today.
U.S. District Chief Judge David Larimer affirmed Bankruptcy Judge John Ninfo II’s decision to dismiss the Kornfield case on the grounds of “substantial abuse.”
Robert Kornfield is a doctor who earned $400,000 a year and had a pension plan worth nearly as much when he and his wife filed a Chapter 7 petition on July 30, 1996.
Chapter 7 allows filers to keep some assets and sell off others to pay debts.

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