Contrary evidence can trump the pre printed form.
I saw it in a case I uncovered in updating the Complete Guide to Means Testing for the NACBA Fall Workshop.
Swartzentruber ( 2009 WL 28730003 (Bankr. N.D. Ohio 2009)) dealt with means testing and the classification of debts as consumer or non consumer.
The debtors there bought a second residence, this one in Florida, and checked the box that they intended to occupy the property as their residence.
In fact, the condo was too small for their family, they intended from the beginning to rent it out, and never lived there.
When they filed bankruptcy, they classified the mortgage as non consumer and had to defend the classification in a motion to dismiss for abuse. If the condo mortgage was investment debt, not consumer debt, the means test didn’t apply to their case.
The court held that their testimony was persuasive and overcome the written representation in the sale contract that they would live there.
Vehicle Cram Down
I saw a parallel in the 910 car situation, where the contract for nearly all car purchases from dealerships have a check mark in the box that the purchase is for personal use.
One of my clients bought a truck with tool boxes and racks for his contracting business. Despite the utter obviousness of the purchase as a business vehicle, that pesky box was checked.
If this was for personal use, the hanging paragraph applied, and we couldn’t cram the truck down to current fair market value. I looked at the facts and took the position that the hanging paragraph didn’t apply. The checked box notwithstanding, this was clearly a work truck.
In my case, no one fought back.
Moral of the story
Don’t hesitate to present and argue a state of affairs contrary to the written documents if your facts support a contrary analysis.
You have to assess the exposure of your client to claims that the party on the other side of the transaction was mislead; if that threat is slight, line up your evidence and get your client’s testimony before the finder of fact.
More here on evidence
Evidence rules in mortgage litigation
The Complete Guide to Means Testing will be part of the materials for the Amelia Island workshops, assuming that my co author Doug Jacobs and I find enough days between now and the September deadline for materials to bring the compendium up to date.
Susanne Robicsek and I have three hours of presentations on means testing scheduled: one on the fundamentals and a second on advanced problems in means testing. It will be thought provoking. Hope to see you there.
Image courtesy of Austin Kleon.