464 B.R. 705
Bankr. W.D. Va.2012Background
- Debtors filed a Chapter 13 petition and proposed plan on April 20, 2011.
- Debtors own three vehicles: a 2005 Kia Sorrento, a 2008 Toyota Yaris, and a 2004 Ford pickup.
- Form B 22C line 27A shows $688 operating expense for two or more vehicles.
- Line 28 and 29 show ownership expenses for two or more vehicles ($335.27 and $276.67).
- Trustee objects to confirmation arguing that the $688 line 27A deduction is improper under the statute and standards.
- Court addresses whether an additional $200 old-car deduction is authorized by the Bankruptcy Code and case law after Ransom.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $688 on line 27A for two vehicles is permissible | Debtors rely on an additional $200 old-car deduction per IRS guidelines | Trustee contends no statutory basis for the $200 old-car deduction; line 27A cannot include it | No statutory basis; old-car deduction not allowed; plan cannot be confirmed |
Key Cases Cited
- In re Ransom, 577 F.3d 1026 (9th Cir. 2009) (IRS guidelines outside local/national standards not controlling; loan/lease payments required for ownership costs)
- Ransom v. MBNA, N.A., 131 S. Ct. 716 (S. Ct. 2011) (Supreme Court: can reference IRS material only when statute lists applicable standard; cannot adopt manual as basis for new deduction)
- In re Johnson, 454 B.R. 882 (Bankr.M.D. Fla. 2011) (Local Standards control; $200 old-car deduction not permitted under 707(b) despite theory)
- In re VanDyke, 450 B.R. 836 (Bankr.C.D. Ill. 2011) (Rejects $200 old-car deduction on line 27A)
- In re Hargis, 451 B.R. 174 (Bankr.D. Utah 2011) (Rejects the deduction; aligns with post-Ransom reasoning)
- In re Schultz, 463 B.R. 492 (Bankr.W.D. Mo. 2011) (Rejects the $200 old-car deduction on line 27A)
- In re Baker, 2011 WL 576851 (Bankr.D. Mont. 2011) (Pre-Ransom decision; relied upon; not controlling after Ransom)