Duhaime's Law Dictionary


Substantial Abuse Definition:

A term of American bankruptcy law which precludes a debtor from availing him or herself of bankruptcy protection.

As Justice Brorby wrote in Re Stewart, under the United States Code, Title 11 ("Bankruptcy"):

"[A] court may dismiss a case filed by an individual debtor (whose debts are primarily consumer debts) if it finds that the granting of the relief would be a substantial abuse....

"[A]bility to pay is a primary factor in determining whether substantial abuse occurred.

'[O]ther relevant or contributing factors must also be examined such as unique hardships...."

In the United States, the court will consider how the inability to pay the debt came about. Generally, if it relates to a factor out of the debtor’s control, such as illness, loss of employment, or some act of God, substantial abuse will not be found.

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