Car Ownership Deduction Allowed for Fully Paid Car
By Nicholas Ortiz, Boston Bankruptcy Attorney on Aug 16, 2008 in General Bankruptcy Information, Means Testing
Massachusetts Bankruptcy Judge Hillman in the case of In re Young , 2008 WL 3274425 (Bkrtcy.D.Mass.2008) decided the important issue of whether the means test deduction for car ownership could be taken by a debtor with no car loan or lease payment. The trustee and a creditor had taken the position that the car ownership deduction was not applicable to a debtor with no loan or lease payment because it was meant to represent an average car payment.
In a well-reasoned opinion the court held that the debtor could take the deduction. The court rejected policy arguments and focused on the language of the statute, holding that as long as a debtor had some car ownership expense (maintenance, insurance, etc.), he could take the entire deduction. This decision will positively affect above-median income debtors who are subject to the means test in both Chapter 7 and Chapter 13 bankruptcies in Massachusetts.
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