450 B.R. 836
Bankr. C.D. Ill.2011Background
- Debtor Erin R. VanDyke filed a Chapter 13 petition; Trustee objected to plan confirmation for improper projected disposable income calculation.
- Trustee disputed Debtor's Form 22C, specifically ownership deduction for the unencumbered Beretta and a $200 additional operating expense for an older/high-mileage vehicle.
- Debtor has two vehicles: a 2008 Pontiac G6 (secured) and a non-running 1994 Beretta with 145,000 miles; Beretta is unencumbered.
- Form 22C initially showed annualized current monthly income above the area median, triggering means-test deductions.
- Debtor amended Form 22C to remove Beretta ownership but added $200 to operating expenses, lowering disposable income to negative.
- Court considered whether the old-car deduction is permissible post-Ransom v. FIA Card Services and how spousal income and marital adjustments affect the analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May an old-car $200 operating expense be claimed for a vehicle over six years old or with 75,000+ miles? | VanDyke relies on IRS/UST guidance to permit the extra expense. | Trustee contends the Ransom decision bars the extra operating expense absent actual loan/lease payments. | Denied; old-car deduction not allowed. |
| Does Ransom preclude treating the extra operating expense as part of the means test? | Ransom permits consideration of IRS guidelines for expenses not conflicting with the Code. | Ransom requires actual secured loan/lease-related ownership expense; otherwise not applicable. | Precluded; the deduction cannot be applied. |
| Can a married debtor take a second vehicle operating deduction when the nonfiling spouse bears the other vehicle payments? | Debtor seeks blended marital deduction for spouse-incurred costs. | No ownership expense for second vehicle; spouse payments are treated as a marital adjustment affecting combined income. | Second-vehicle operating deduction denied; marital adjustment used. |
| Should IRS guidelines post-Ransom control the interpretation of National/Local Standards for bankruptcy purposes? | UST Position may inform interpretation of expenses. | IRS guidelines are informational, not controlling when inconsistent with the Bankruptcy Code. | IRS guidelines are not controlling; statute controls. |
Key Cases Cited
- Ransom v. FIA Card Services, N.A., 131 S. Ct. 716 (U.S. 2011) (means test; ownership deduction requires actual loan/lease payments; supports rejection of old-car deduction)
- Hamilton v. Lanning, 130 S. Ct. 2464 (U.S. 2010) (projection of disposable income based on actual circumstances; no reliance on stale numbers)
- In re Byrn, 410 B.R. 642 (Bankr. D. Mont. 2008) (previous allowance of certain vehicle expenses under local standards)
- In re Washburn, 579 F.3d 934 (8th Cir. 2009) (debtor not allowed ownership deduction without loan/lease; informs Ransom framework)
- In re Tate, 571 F.3d 423 (5th Cir. 2009) (ownership expense limitations under means test)
- In re Ross-Tousey, 549 F.3d 1148 (7th Cir. 2008) (ownership expense interpretation in means test prior to Ransom)
- In re Thiel, 446 B.R. 434 (Bankr. D. Idaho 2011) (discusses IRS standards in bankruptcy context)