572 B.R. 785
Bankr. N.D. Ga.2016Background
- Debtor Brian K. Feagan filed Chapter 13 and proposed a plan that relied on Form 22C-2 means-test deductions to calculate projected disposable income.
- Feagan owned a 2004 Ford Escape free and clear but had a $3,086 title pawn (a nonpurchase-money security interest) and claimed the IRS Local Standards $517 Ownership Costs allowance on Line 13a.
- Trustee objected to confirmation; the Bankruptcy Court overruled the objection and confirmed the plan, allowing an Ownership Costs deduction reduced by the actual secured payment to avoid double counting ($517 − $51.43 = $465.57).
- If allowed, that deduction reduced Feagan’s projected disposable income substantially and produced a small dividend to unsecured creditors; disallowance would increase payments to unsecured creditors.
- The district court reviews legal conclusions de novo and addressed whether the Ownership Costs allowance may be taken for a vehicle encumbered solely by a nonpurchase-money security interest.
Issues
| Issue | Feagan's Argument | Trustee's Argument | Held |
|---|---|---|---|
| Whether an above‑median Chapter 13 debtor may deduct the IRS "Ownership Costs" allowance for a vehicle encumbered only by a nonpurchase‑money security interest | The presence of any encumbrance on the vehicle makes the Ownership Costs allowance "applicable" under §707(b)(2)(A)(ii)(I); Ransom language supports deduction | Ownership Costs covers only loans/leases/purchase‑money financing used to acquire a vehicle; nonpurchase‑money loans (e.g., title pawn) are not Ownership Costs | Reversed: debtor may not deduct the Ownership Costs allowance for a vehicle encumbered solely by a nonpurchase‑money security interest (but may deduct the actual secured payment under §707(b)(2)(A)(iii) and operating costs) |
Key Cases Cited
- Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) (Ownership Costs deduction applies only to loan/lease payments; debtor who makes no loan/lease payments cannot take deduction)
- Hamilton v. Lanning, 560 U.S. 505 (2010) (bankruptcy court may adjust forward‑looking disposable income where actual circumstances warrant)
- In re Cox, 338 F.3d 1238 (11th Cir. 2003) (de novo review of legal conclusions from bankruptcy court)
- IBT Int., Inc. v. Northern (In re Int. Admin. Servs., Inc.), 408 F.3d 689 (11th Cir. 2005) (clear error standard for factual findings)
- In re Gen. Dev. Corp., 84 F.3d 1364 (11th Cir. 1996) (abuse of discretion standard for equitable determinations)