595 B.R. 419
Bankr. D. Utah2019Background
- Debtors filed Chapter 13 and claimed on Form 122C-2 a vehicle ownership Local Standard deduction of $497 and separately listed a $66.67 title-loan secured payment, yielding a net ownership deduction of $430.33.
- Check City holds a title loan secured by the 2011 Chevrolet Impala; original high-interest, short-term loan; Debtors propose to value collateral at $4,000 and pay secured portion through plan.
- Debtors are above-median income, so disposable income and allowable expenses are governed by §707(b)(2) (the Means Test) and the IRS National/Local Standards.
- Trustee objected to confirmation, arguing the Means Test ownership allowance cannot be claimed for a non-purchase-money, high-interest title loan and the Means Test deduction should be limited to the actual monthly payment ($66.67).
- The court held a hearing, took the matter under advisement, and ruled that title loans are not an "applicable" Local Standard ownership expense; confirmation was denied and the Trustee's objection sustained.
Issues
| Issue | Plaintiff's Argument (Trustee) | Defendant's Argument (Debtors) | Held |
|---|---|---|---|
| Whether an above-median debtor may claim the IRS Local Standard vehicle ownership allowance for a non-purchase-money title loan | Local Standard ownership allowance is limited to lease or purchase financing; title loans are not "applicable" and only the actual payment may be deducted | The Debtors may use the Local Standard ownership allowance even though the title loan is non-purchase-money, because the expense is "reasonably necessary" to keep the car | Court sustained Trustee: title loans are not an applicable Local Standard ownership expense; Debtors may deduct only the actual payment (not the $497 ownership allowance) |
Key Cases Cited
- Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) (Means Test ownership allowance applies only if debtor actually bears an ownership expense; courts may consult IRS Collection Financial Standards for guidance)
- Hamilton v. Lanning, 560 U.S. 505 (2010) (projected disposable income must reflect debtor's ability to pay; courts may adjust plan based on that ability)
- Feagan v. Townson, 572 B.R. 785 (N.D. Ga. 2016) (district court held title-loan payments do not qualify for the IRS Local Standard ownership allowance)
- In re Lopez, 574 B.R. 159 (Bankr. E.D. Cal. 2017) (refinance loan treated differently; court allowed ownership deduction for a long-term refinance-like vehicle loan)