In re Jackson, 537 B.R. 238

Background

Debtors Gabriel Levar and Monte Nichole Jackson filed a Chapter 7 petition and, as above‑median income filers, completed Official Form 22A‑2 (Means Test).
On Form 22A‑2 they claimed IRS Local Standard amounts for housing and vehicle ownership and then subtracted their actual monthly mortgage and vehicle loan payments, resulting in net ownership deductions on Lines 9c, 13c and 13e.
The Bankruptcy Administrator (BA) moved to dismiss under 11 U.S.C. § 707(b)(1)/(2), arguing debtors may deduct only the lesser of actual expenses or the IRS standards (which here would eliminate the housing and vehicle deductions).
Debtors argued the Official Form and § 707(b)(2)(A) require use of the applicable IRS Local Standards, offset by actual secured‑debt payments as the form instructs, and that doing so avoids double‑counting secured debt payments.
The only disputed legal question was whether clause (ii) (National/Local Standards) is limited by the “notwithstanding” sentence to actual expenses (or otherwise capped at actual expenses) when the debtor has secured debts in those categories.
Court held the debtors correctly applied Form 22A‑2 and § 707(b)(2): they may claim the applicable Local Standard amounts offset by their actual secured‑debt payments; the BA’s motion to dismiss was denied.

Issues

Issue	BA's Argument	Debtors' Argument	Held
Whether § 707(b)(2)(A)(ii) Local/National Standards are limited to actual expenses (or the lesser of actual or standard) when debtor has secured debt for housing/vehicles	Standards operate as a cap; if actual expense is lower, debtor may only deduct actual expense (no deduction if actual is zero)	Official Form 22A‑2 and statute permit claiming the applicable local standard amount (then subtracting actual secured payments), preventing double counting	Court: debtors may claim the Local Standard amount offset by actual secured payments as instructed on Form 22A‑2; BA’s rule rejected
Whether the "notwithstanding" sentence excludes housing/vehicle standard allowances when secured debts exist	The "notwithstanding" sentence excludes payments for debts from clause (ii), so standards should not cover items that are debts	The sentence prevents double counting of debt payments; standards themselves are not “debts” and remain claimable where applicable	Court: "notwithstanding" does not bar claiming the standard allowances; it requires subtracting secured debt payments as the form does
Whether Ransom requires a narrower reading of applicable standards (favoring actual expenses)	Ransom supports limiting standards to actual expenditures when actuals are lower	Ransom left unresolved deductibility when debtor has lower-than-standard expenses; it supports use of standards where an expense is "applicable"	Court: Ransom does not mandate BA’s interpretation; it is consistent with using standards when an applicable expense exists
Whether Official Form 22A‑2 is inconsistent with § 707(b)(2) and therefore improper to follow	The Form’s instructions conflict with statutory "notwithstanding" sentence	The Official Form harmonizes clauses (ii) and (iii) to avoid double counting and should be followed; Rule 9009 and Judicial Conference support form usage	Court: Form 22A‑2 correctly implements § 707(b)(2) and the debtors complied with it

Key Cases Cited

Ransom v. FIA Card Servs., 562 U.S. 61 (2011) (describes when IRS Local/ National Standards are "applicable" and declines to decide issue where debtor had no ownership expense)
Johnson v. Zimmer, 686 F.3d 224 (4th Cir. 2012) (discusses means‑test use of standardized allowances for above‑median debtors)
In re Scott, 457 B.R. 740 (Bankr. S.D. Ill. 2011) (Official Form synthesizes clauses (ii) and (iii); subtract secured payments from IRS standards to avoid double counting)
In re Musselman, 394 B.R. 801 (E.D.N.C. 2008) (debtors may include full IRS Local Standards even when actuals are lower)
In re Harris, 522 B.R. 804 (Bankr. E.D.N.C. 2014) (contrasting line concluding actual expenses control for vehicle ownership)
In re Fields, 534 B.R. 126 (Bankr. E.D.N.C. 2015) (held standards operate as a cap; if actuals lower, limited to actuals)
In re Sisler, 464 B.R. 705 (Bankr. W.D. Va. 2012) (explains Form computation: Local Standard minus monthly debt payment = net ownership expense)
In re Miranda, 449 B.R. 182 (Bankr. D.P.R. 2011) (agrees with Government’s Ransom position that debtor may claim full Local Standards when expense is applicable)
In re Denzin, 534 B.R. 883 (Bankr. E.D. Va. 2015) (contrasts mechanical § 707(b)(2) means test with fact‑specific § 707(b)(3) totality test)
In re Uhlig, 504 B.R. 916 (Bankr. E.D. Wis. 2014) (courts consistently allow above‑median debtors to take standard deductions despite lower actual expenses)