MEMORANDUM OPINION

Hon. David T. Thuma, United States Bankruptcy Judge.

Before the Court is the Debtor's motion for voluntary dismissal under 11 U.S.C. § 707(a) (the "Motion").1 The Trustee objected, and argued that he should be given the opportunity to sell Debtor's house and an adjacent rental house for the benefit of unsecured creditors.2 After a final hearing on the merits, the Court concludes that Debtor demonstrated sufficient cause for dismissal, so the motion will be granted.

I. FACTS

The Court finds:3

Debtor filed his bankruptcy petition on July 17, 2015. Phillip Montoya was assigned as the Trustee.

Debtor owns and lives in a small house at 2311 Tapia Blvd. SW, Albuquerque, NM. The house was given to him by his parents. Debtor listed the house on his bankruptcy schedules at $70,000. An appraisal from 2009 gave a value of $115,000. The house is encumbered by a $34,000 line of credit mortgage.

Debtor's brother owned a smaller house next door, at 2307 Tapia Blvd SW. Because his brother did not pay property taxes, in about 2001 the house was scheduled for tax sale. Debtor bought the house from the brother by paying the taxes (about $2,000), but told his brother that he would give back the house if the brother repaid the $2,000. The brother never did. Debtor scheduled the 2307 Tapia house at $30,000.4 It is unencumbered.

Debtor scheduled approximately $20,000 in general unsecured claims.5 The nine proofs of claim filed in the case were from seven credit card issuers and their assignees. The proofs of claim total $14,432.25. The record indicates that Debtor was current with all his creditors, secured and unsecured, before he filed bankruptcy.

Debtor is unable to work and receives $550 per month in Social Security disability payments. His income is supplemented by $800 per month from renting the 2307 Tapia house. Debtor relies on the rental income to pay his living expenses.

Based on his demeanor and testimony, the Court finds that Debtor has significant cognitive disabilities, which prevented him from understanding the nature and effect of filing this bankruptcy case.

Debtor's friends advised him to file bankruptcy. It was their view that bankruptcy would be a good idea. Debtor, thinking the advice was sound, sought out bankruptcy petition preparers Samuel Post and Jessica Patricio to help him with his schedules. It is clear Debtor did not understand what could happen to his non-exempt assets if he filed bankruptcy. Debtor testified that he relied on Mr. Post to explain basic bankruptcy concepts to him, but it is clear that Debtor did not understand any of the explanations given.6 Debtor did not read his schedules or petition, and it is unclear whether he would have understood them if he had. Debtor also testified that he did not and does not know whether Post is an attorney.

Debtor mistakenly believed that he would be able to keep his house and the rental property. He had no idea that the rental house would certainly have to be turned over to a bankruptcy trustee, nor that his own home could be vulnerable.

Filing a Chapter 7 bankruptcy case clearly was detrimental to Debtor's interests, and any competent attorney would have advised against it. A Chapter 13 case might have been advisable, as would an out-of-court credit card repayment plan, and/or borrowing enough money to pay off his unsecured creditors through his existing line of credit or by securing the loan with the rental property.

On September 1, 2015, less than two months after filing his petition, Debtor obtained an attorney and filed his motion to dismiss. The Trustee is the only objecting party.7

II. DISCUSSION

A. Voluntary Dismissal for Cause under § 707(a).

Debtor seeks to dismiss this case under § 707(a). Section 707(a) provides that "[t]he court may dismiss a case under this chapter only after notice and a hearing and only for cause ..." Section 707(a) includes a list of nonexclusive examples of cause. A debtor seeking to voluntarily dismiss a case under § 707(a) has the burden to show cause for dismissal. In re Turpen, 244 B.R. 431, 434 (8th Cir. BAP 2000); Terry v. Sparrow, 328 B.R. 450, 455 (M.D.N.C.2005) (debtor has no absolute right to dismiss his case without showing cause); In re Bartee, 317 B.R. 362, 366 (9th Cir. BAP 2004) ("Debtors bear the burden of proving that dismissal would not prejudice their creditors."); In re Akbarian, 2013 WL 6710347, at *3 (Bankr. D.Utah) (debtor must show cause to dismiss her case).

A finding of cause is "committed to the sound discretion of the bankruptcy court." In re Smith, 507 F.3d 64, 73 (2d Cir.2007) (quoting In re Hull, 339 B.R. 304, 308 (Bankr.E.D.N.Y.2006)). It has been described as an "equitable determination." In re Jabarin, 395 B.R. 330, 339-340 (Bankr.E.D.Pa.2008); In re Garza, 2013 WL 3155105, at *3 (Bankr.D.Colo. 2013) (citing In re Rent-Rite Super Kegs West Ltd., 484 B.R. 799, 808 (Bankr. D.Colo.2012)). See also In re Smith, 507 F.3d 64, 73 (2d Cir.2007) (weighing dismissal motion is "guided by equitable considerations").

Cause "may simply be that dismissal is in the best interest of the debtor and not prejudicial to creditors." 6 Collier on Bankruptcy, ¶ 707.03[3] (Alan N. Resnick & Henry J. Sommer eds., 16th ed.). See also In re Aupperle, 352 B.R. 43, 46 (Bankr.D.N.J.2005) (to the same effect); In re Hopper, 404 B.R. 302, 308 (Bankr. N.D.Ill.2009) (same, quoting Aupperle).

When considering whether "cause" exists to dismiss a case at the debtor's request, the Tenth Circuit Bankruptcy Appellate Panel said:

In re Isho, 2013 WL 1386208, at *3 (10th Cir. BAP) (unpublished). Other factors include whether an objection to discharge, an objection to exemptions, or a preference claim is pending, In re Schafroth, 2012 WL 1884895, at *2 n. 8 (Bankr.D.N.M) (citing In re Turpen, 244 B.R. 431, 434 (8th Cir. BAP 2000)); whether any creditors objected to the motion to dismiss, In re Aupperle, 352 B.R. 43, 46 (Bankr.D.N.J.2005); whether any active collection efforts had been undertaken before the filing, Id.; and whether there were any pre-petition attempts to hide assets or place assets outside the reach of creditors, In re Spatz, 221 B.R. 992, 994 (Bankr.M.D.Fla.1998).

The factors can be grouped into two general areas: the debtor's motivation in seeking dismissal after invoking the protections of the bankruptcy court; and whether dismissal is contrary or "prejudicial" to creditor interests. In re Jabarin, 395 B.R. at 340.

1. Debtor's Motivation to Dismiss. In evaluating a motion to dismiss, courts will closely scrutinize a debtor's motivation for seeking dismissal. A debtor must seek dismissal in good faith without intent to manipulate the court system. Jabarin, 395 B.R. at 340 ("Limiting voluntary dismissal to debtors who are acting in good faith simply may be an example of the general principle that courts do not reward anyone who is trying to manipulate the court system."). When debtors file bankruptcy to obtain the benefit of the automatic stay, but later seek dismissal because the burdens of bankruptcy begin to outweigh its benefits, courts likely will deny the motions. See, e.g., In re Tanguay, 206 B.R. 575, 577-78 (Bankr. M.D.Fla.1997) (court denied motion to dismiss, in part because of an implicit finding that debtors' previous Chapter 13 cases were filed "merely in order to impose the automatic stay" and were dismissed "once [debtors were] out of harm's way"); In re Akbarian, 2013 WL 6710347, at *4-5 (Bankr.D.Utah) (motion to dismiss denied because of, inter alia, delay in seeking dismissal, questions about pre-petition transfers, and pending adversary proceedings, including one objecting to debtor's discharge); In re Hickman, 384 B.R. 832, 841 (9th Cir. BAP 2008) (BAP affirmed bankruptcy court's denial of motion to dismiss, holding that debtor shirked his duty to disclose all assets and financial affairs, and to cooperate with the trustee.).

In contrast, where it is apparent that the debtor seeks dismissal because an innocent mistake of law or fact, courts are more likely to allow the dismissal. See In re McDaniel, 363 B.R. 239, 244-45 (M.D.Fla.2007) (bankruptcy court order granting debtor's motion to dismiss affirmed; debtor sought dismissal because she learned that her federal tax debt was not dischargeable); In re Aupperle, 352 B.R. 43, 46 (Bankr.D.N.J.2005) (motion to dismiss granted when debtor filed under the mistaken belief that she would be able to keep her home, but it turned out that there was enough equity to expose it to a trustee sale.); In re Todd, 2015 WL 5042116 (Bankr.N.D.Ga.) (motion to dismiss granted because the court found that debtor had not authorized his attorney to file the case); In re Hull, 339 B.R. 304, 308 (Bankr.E.D.N.Y.2006) (motion to dismiss granted where debtor did not understand that her personal injury claim would be estate property and controlled by the trustee). Cf. In re Hopper, 404 B.R. 302 (Bankr.N.D.Ill.2009) (debtor's understanding that she would be able to keep her house was insufficient reason to grant her motion to dismiss).8

2. Prejudice to Creditors. While most voluntary dismissal cases ask whether creditors would be "prejudiced" by dismissal, the term has not been well defined. In some cases the potential prejudice is clear and substantial. More often, "prejudice" means little more than that creditors would prefer that the debtor stay in bankruptcy.

Courts differ on the extent of prejudice they can tolerate before declining to dismiss a case. The Jabarin court identified three standards used:

395 B.R. at 337-39 (citing cases). It went on to say, however, that "all of the courts may be employing, at bottom, the same analysis — a factually intensive assessment of the debtor's reasons for requesting dismissal and of the impact dismissal can be expected to have on the creditors." Id. at 339. See also In re Akbarian, 2013 WL 6710347, *3 (Bankr.D.Utah) ("[t]hese considerations can be incorporated into a test that reviews and balances a number of factors to determine whether dismissal is appropriate."). The Jabarin court adopted the "balancing of interests" test.

Some court have observed that creditors "are generally not prejudiced by dismissal since they will no longer be stayed from resorting to the state courts to enforce and realize upon their claims." In re Schwartz, 58 B.R. 923, 925 (Bankr. S.D.N.Y.1986); In re Hull, 339 B.R. 304, 307 (Bankr.E.D.N.Y.2006) (citing Schwartz); In re McDaniel, 363 B.R. 239, 246 (M.D.Fla.2007) (citing Hull); In re Cherney, 2015 WL 9312098, at *3 (Bankr. E.D.Wis.) (citing Hull).

Courts are in general agreement that a substantial delay between the petition date and the dismissal motion filing date is prejudicial. See In re Stairs, 307 B.R. 698, 703 (Bankr.D.Colo.2004) (Creditors prejudiced by fifteen month delay.); In re Schwartz, 58 B.R. at 925 ("Dismissal of a bankruptcy petition that was filed principally to forestall creditors should not be permitted after the delay sought has been achieved."); In re Luhrs, 89 F.3d 826, at *1 (2d Cir.1995) (unpublished) (citing and quoting Schwartz). See also In re Smith, 507 F.3d 64, 72 (2d Cir.2007) ("[C]reditors can be prejudiced if the motion to dismiss is brought after the passage of a considerable amount of time and they have been forestalled from collecting the amounts owed to them.") (quoting Schwartz, 58 B.R. at 925).

There also is general agreement that creditors would be prejudiced if estate assets, available to creditors in the bankruptcy case and needed to pay their claims, would become unavailable upon dismissal. See In re Stephenson, 262 B.R. 871 (Bankr.W.D.Okla.2001) (prejudice found where debtor might spend tax refund); In re Schafroth, 2012 WL 1884895, at *3 (Bankr.D.N.M.) (prejudice found where money in a Swiss bank account would become unavailable to creditors if the case were dismissed); In re Leach, 130 B.R. 855, 857 (9th Cir. BAP 1991) (dismissal would prejudice creditors because then debtor could claim a homestead exemption, something he had not done before filing bankruptcy); In re Akbarian, 2013 WL 6710347, at *3 (loss of potential judgment setting aside fraudulent transfer).

B. The Factors Weigh in Favor of Dismissal.

The Court analyzes the Debtor's motivation in dismissing the case, and resulting prejudice to creditors, as follows:

Debtor's Motivation

Factor                                           Discussion

Debtor best interests                            Debtor would prefer dismissal. Dismissal
                                                 appears to be in his best interests. Debtor
                                                 would not have to pay trustee fees from the
                                                 equity in the rental property. The Trustee
                                                 sought turnover of Debtor's personal
                                                 residence, which appears unnecessary to
                                                 satisfy unsecured claims.

Pending discharge or dischargeability            The only such matter is the Trustee's objection
proceedings; pending exemption objection;        to Debtor's claim of homestead exemption for
pending proceedings to recover fraudulent or     2307 and 2311 Tapia Blvd. Clearly. Debtor
preferential transfers                           cannot claim a homestead exemption for 2307
                                                 Tapia, and is limited to $60,000 for his
                                                 homestead exemption on 2311 Tapia.
                                                 Debtor's claim of exemption on these two
                                                 properties does not show bad faith, but does
                                                 show that he did not understand what he was
                                                 doing, and received poor advice from the
                                                 bankruptcy petition preparer.

Pre-petition collection efforts                  There were none. The proofs of claim indicate
                                                 that Debtor was current on his pre-petition
                                                 payments.

Pre-petition attempts to hide assets             There were no such attempts.

Other indications debtor is attempting to        There are no such indications. Debtor moved
manipulate the court system                      promptly to dismiss after he understood that he
                                                 might lose his house and the rental property.
                                                 The bankruptcy filing was an honest mistake
                                                 based on bad advice and Debtor's cognitive
                                                 disabilities.

These factors strongly favor dismissal. It is clearly in Debtor's best interest to dismiss this case. Debtor stands to lose his house and/or rental property9 to pay off a relatively small amount of unsecured credit card debt. Moreover, Debtor's cognitive disabilities prevented him from understanding the nature and effect of filing his Chapter 7 petition.10 Debtor received bad advice from friends, and then hired a bankruptcy petition preparer who Debtor mistakenly relied upon to give him legal advice. Debtor attended his § 341 meeting, cooperated with the Trustee, and promptly sought dismissal once he understood that his real property was in jeopardy. Debtor was current with his creditors when he filed bankruptcy, and there is no indication that he hid or transferred assets pre-petition. Debtor has no nondischargeable debts, and no one is seeking to deny his discharge.

Prejudice

Factor                                            Discussion

Creditor best interests                           Creditors may be better off if the case stays in
                                                  bankruptcy. No creditors objected to
                                                  dismissal, however, and it seems quite likely
                                                  that any creditor exercising its state law
                                                  collection rights would be paid in full.
                                                  Depending on how the Debtor and his counsel
                                                  choose to proceed, creditors could be paid
                                                  sooner after dismissal than if the motion were
                                                  denied.

Amount of delay in filing motion to dismiss       The motion to dismiss was filed less than two
                                                  months after the petition date. There might be
                                                  some delay in paying creditors, but it is hard to
                                                  say, because the trustee would have to sell the
                                                  rental house before paying creditors. The
                                                  Debtor might be able to obtain a mortgage loan
                                                  on the rental house and pay his creditors
                                                  promptly upon dismissal.

Would assets become unavailable to creditors?     The source of creditor payment is Debtor's
                                                  equity in his house and in the rental property,
                                                  as well as the income from the rental. None of
                                                  this would be lost to creditors if the case were
                                                  dismissed.

Whether creditors or the trustee objected to      The Trustee objected to the motion to dismiss.
dismissal                                         Creditors did not.

Ability to pay debts outside of bankruptcy        The debtor can pay his debts outside of
                                                  bankruptcy by borrowing money and pledging
                                                  the rental house as collateral, or by entering
                                                  into a monthly payment plan.

The "prejudice" factors also favor dismissal, since creditors would suffer little or no prejudice if the case were dismissed. There was only a slight delay between the petition date and the date Debtor sought dismissal. If dismissed, none of Debtor's assets would be removed from the reach of creditors. The small number of credit card creditors are sophisticated lenders that can readily pursue their state court rights and remedies. They may be paid sooner than if the case remained in Chapter 7. None of the creditors objected to dismissal. Although the trustee objected, that is not enough to tip the balance against dismissal.

Balancing the interests of the parties and focusing on Debtor's motivation in dismissing this case and potential prejudice to creditors, the Court concludes that in this case the balance tips in favor of dismissal.

III. CONCLUSION

Debtor carried his burden of showing cause to dismiss this bankruptcy case under § 707(a). The motion to dismiss will be granted. The Court will enter a separate dismissal order.