Posted by NCBRC - January 4th, 2017
Section 707(b)(2) permits a debtor to take the full National and Local Standard amounts for expenses even though the debtor’s actual expenses are less. Lynch v. Jackson, No. 16-1358 (4th Cir. Jan. 4, 2017).
When above-median debtors, Gabriel and Monte Jackson, filed for chapter 7 bankruptcy they complied with Form 22A’s instructions to list their expenses using the IRS National and Local Standard amounts rather than their actual expenses which were less. The bankruptcy administrator moved to dismiss their case as abusive under section 707(b)(2)(A)(i). The bankruptcy court denied the motion to dismiss. In re Jackson, 537 B.R. 238 (Bankr. E.D. N.C. 2015), and the Fourth Circuit accepted direct appeal. Read More
Posted by NCBRC - September 20th, 2016
A debtor may not deduct “ownership costs” under the IRS National and Local Standards for a non-purchase-money security interest in his car. Feagan v. Townson (In re Feagan), No. 16-108 (N.D. Ga. Sept. 6, 2016).
When he filed for chapter 13 bankruptcy, Brian Keith Feagan, an above-median debtor, deducted “ownership costs” for his vehicle based on payments he made on a post-purchase loan secured by the vehicle. Mr. Feagan paid $51.43 per month on a “title pawn” secured by his vehicle which he deducted on the Means Test as “payments on a secured debt” under section 707(b(2)(A)(iii). He also deducted $517.00 from his income as a vehicle ownership expense under the IRS Local Standards based on that loan. His proposed plan did not pay unsecured creditors in full. In order to avoid duplicative deductions, the bankruptcy court required Mr. Feagan to reduce his ownership costs deduction by the amount of his average monthly payment on the secured debt for a total reduction of his projected disposable income by $465.57. The bankruptcy court then confirmed the plan over the trustee’s objection. Read More
