May An Individual Debtor Claim Two Ownership Expenses On Form 22C?

22 Aug May An Individual Debtor Claim Two Ownership Expenses On Form 22C?

In re Barrett, No. 07-40049 (SDIL July 10, 2007) permits an individual debtor’s use of two ownership expen’ses on Form 22C to lower her projected disposable income. The Trustee argued this debtor lived alone and claimed an ownership expense for a 03 Toyota Tacoma and a 06 Yamaha 650 V-star motorcycle. In rejecting this position, Chief Judge Kenneth Meyers took a route starting with 1325(b) to determine projected disposable income and by looking at the amounts reasonably necessary for debtor’s support as calculated in the means test for that debtor under 707(b). Then the court found that 707(b) mandates use of the monthly expenses specified in the National and Local Standards issued by the Internal Revenue Service. Transportation expenses are contained in the Local Standards, and there Judge Meyers made a cogent observation. Local Standards do not differentiate based on household size. It merely sets forth a nationwide standard deduction of $471 for a first car and $332 for a second car. The court noted that lines 28 and 29 of Form 22C permit a debtor to select between the categories of 1 or 2 or more vehicles. Nothing on Form 22C limits the selection based on household size.

This court takes a literal reading of the statute and Form 22 in deciding this case and rejects the reasoning In Re Aprea, No. 06-40493, 2007 WL 1219397 (EDTX April 25, 2007) [disallowed deduction on luxury vehicle as not necessary] and In re Hardacre, 338 B.R. 718 [rejected deduction due to lack of lien]. Those cases looked beyond the National and Local Standards and used the Internal Revenue Manual and the Collection Financial Standards to disallow a single debtor more than one vehicle expense. The SDIL court supports a chapter 7 case of In re Zaporski, No. 06-51617 2007 WL 1186032 (EDMI April 17, 2007) which held the new law did not import the financial necessity standards of the IRS collection procedures, and required use of the monthly expense amounts listed in the National and Local Standards.

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