1st Circuit Affirms Means Test Decision

05 Aug 1st Circuit Affirms Means Test Decision

The U.S. Court of Appeals for the First Circuit today affirmed in re Rudler, a case in which both the Bankruptcy Court and the Bankruptcy Appellate Panel for the First Circuit allowed a means test deduction for a car payment when then car was being surrendering in the course of the bankruptcy case. The opinion is available here.
The crux of the government’s objection was that allowing a means test deduction for a payment that the debtor wasn’t going to be paying after the bankruptcy would be unfair and contrary to the intent of Congress. The debtor, on the other hand, focused on the language of the statute which allowed a deduction for secured debts “scheduled as contractually due.” After addressing the scuffle over whether this language was ambiguous, the majority of the circuit court held that language was unambiguous and that no absurdity would result from simply following it. It pointed out that, since the case was a Chapter 7, a motion for abuse under the totality of the circumstances was still possible.

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