Bankr. No.:
07-40213
Chapter:
7
Date of Decision:
October 30, 2007
Issue:
(1) Whether a debtor may claim an ownership expense on Line 23 or Line 24 of Official Form B22A for a vehicle the debtor owns free and clear of liens? (2) Whether a debtor may claim an operation expense on Line 22 of Official Form B22A, or an ownership expense on Line 23 or Line 24 of Official Form B22A, for a vehicle the debtor has surrendered to a secured creditor, if the vehicle is still titled in the debtor’s name? (3) Whether a debtor may claim a deduction on Line 42 of Official Form B22A for regular payments on a secured debt, or a deduction on Line 43 of Official Form B22A for cure payments on a secured debt, when the debtor intends to surrender the collateral securing the debt? (4) Whether a debtor may claim a deduction on Line 42 of Official Form B22A for payments on a loan from a qualified retirement plan?
Ruling:
(1) A debtor may not claim an ownership expense for a vehicle the debtor owns free and clear of liens. (2) A debtor may not claim either an operation expense or an ownership expense for a vehicle the debtor has surrendered to a secured creditor, even if the vehicle is still titled in the debtor’s name. (3) A debtor may not deduct payments on a secured debt if the debtor intends to surrender the collateral securing the debt. (4) A debtor may not deduct payments on a loan from a qualified retirement plan.
Full Bankruptcy Court Decision:
Appeal Summary:
On appeal, the U.S. District Court, the Hon. Lawrence L. Piersol, affirmed the Bankruptcy Court’s holding that a debtor may not deduct ownership expenses or loan payments on a 401(k) plan in computing disposable income, but reversed the Bankruptcy Court’s holdings that a debtor may not deduct ownership expenses for a vehicle owned free and clear and for a vehicle surrendered to the secured creditor prior to the bankruptcy filing, and reversed the Bankruptcy Court’s holding that a debtor may not deduct future payments on a secured debt if the debtor intends to surrender the collateral securing the debt or the collateral has been repossessed by the secured lender.
Full Bankruptcy Appellate Panel/District Court Appeal Opinion: