463 B.R. 492
Bankr. W.D. Mo.2011Background
- Above-median Chapter 13 debtors own unencumbered vehicles over six years old or with more than 75,000 miles.
- Debtors claim an additional $200 per vehicle for monthly operating expenses on Form 22C; Trustee objects.
- Trustee contends deduction relies on IRS guidelines, not the Bankruptcy Code standards, violating §1325(b)(3) and §707(b)(2).
- Court has jurisdiction under 28 U.S.C. §§ 1334(b), 157(a), 157(b)(1); proceedings are core under § 157(b)(2)(L).
- Schultz, Smith, and Fulton cases are consolidated; each debtor shows excessive income above Missouri medians, affecting disposable income.
- Court ultimately holds debtors may not claim the additional $200 per vehicle; Trustee’s motions to deny confirmation are sustained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether above-median debtors may claim $200 per vehicle for older cars | Schultz argues IRS manual permits it; McGuire/Wilson precedent supports deduction. | Trustee contends deduction is not in the Code or Local Standards and is improper. | Not permitted; deduction denied. |
| Whether IRS manual language can justify the deduction under §707(b)(2) | Manual supports additional expense for older vehicles. | Manual language not incorporated into the standards and would misalign with Ransom. | Not supported by statute; not allowable. |
| Whether guidelines may be treated as caps or allowances under the Local Standards | Guidelines could justify discretionary additional expense. | Guidelines are caps and not allowances; actual expenses govern. | Guidelines function as caps; deduction disallowed. |
Key Cases Cited
- Ransom v. FIA Card Services, N.A., 131 S. Ct. 716 (2011) (guidelines not incorporated; 'applicable' standard interpretation)