Means Test on Old or High Mileage Cars
By L. Jed Berliner, Massachusetts Bankruptcy Attorney on Sep 29, 2008 in Chapter 7 Bankruptcy, Massachusetts, Means Testing, Your Bankruptcy Attorney & You
The Means Test is not a pretty part of the new bankruptcy filing requirements. Above Median Income filers need to compare their income and expenses against allowances based on the Internal Revenue guidelines for delinquent taxpayers. The new statute is not particularly clear on a number of issues, including two which concern the form’s three places where vehicle expenses might fit: The two IRS allowances for vehicles, one for ownership expenses one for operating expenses, and the catch-all “special circumstances” which is left to the Court’s discretion (for example, for excessive commuting costs needed to retain employment).
Courts are split on whether a bankrupt may use the IRS vehicle ownership allowance where there is no vehicle loan. They are also split on whether a bankrupt may also use the extra $200 allowance for a car older than six years or having more than 75,000 miles, found in the Internal Revenue Manual, as an addition to ownership expenses, to operating expenses, to special circumstances, or simply not at all.
This can decisively determine if your Chapter 7 case gets dismissed. Be sure your attorney knows the issues and the local decisions.
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