1:06-bk-10188•Lori Ann Schneider
Gesamter Gesetzestext
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 1 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA In re LORI ANN SCHNEIDER, No. 06-10188 Debtor(s). ______________________________________/ Memorandum re Ownership Costs of Second Car _________________ Debtor Lori Schneider’s income is higher than the median income for her family size, so her Chapter 13 plan is subject to § 1325(b)(3) of the Bankruptcy Code. That section provides that her reasonably necessary expenses are governed by § 707(b)(2) of the Code. Section § 707(b)(2) incorporates the standard expenses used by the Internal Revenue Service for the area in which the debtor resides when considering an offer in compromise. The only issue remaining in this case is whether Schneider is entitled under IRS standards to the $332.00 ownership expense she has claimed for her second car and third cars, a 1998 Ford Contour and a 1993 Toyota Corolla. She owns both vehicles free and clear. The Chapter 13 Trustee at first objected to any ownership expense, and then amended his objection to oppose any amount over $200.00. Under the IRS standards, no ownership deduction is allowed for a vehicle which is owned free and clear. In re Hardacre, 338 B.R. 718, 728 (Bkrtcy.N.D.Tex.2006); IRM 5.8.5.5.2(3)[“After the loan is ‘retired’ . . . the ownership expense is not applicable . . . .” The ownership deduction claimed by Schneider at line 29 of her form B 22C therefore cannot be allowed. Entered on Docket July 18, 2006 GLORIA L. FRANKLIN, CLERK U.S BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA Case: 06-10188 Doc# 20 Filed: 07/18/06 Entered: 07/18/06 13:49:06 Page 1 of 2
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2 However, the IRS standards make allowance for vehicles owned free and clear. While there is no allowable ownership expense, they allow and additional operating expense of $200.00 over and above the standard operating expense for each vehicle over six years old or with over 75,000 miles on it. Id. This deduction is not unfettered; IRM 5.8.5.5.2(1) provides that expenses that are excessive should be disallowed, so a debtor cannot increase the deduction by owning unnecessary vehicles. However, since both the Contour and the Corolla are more than six years old, Schneider may deduct the standard operating expense plus $200.00 for each vehicle, provided that she show that each vehicle is necessary for the functioning of her family. For the foregoing reasons, the Trustee’s objection will be sustained. Further proceedings shall be consistent with this decision. Either party may submit an appropriate form of order. Dated: July 18, 2006 SAlan Jaroslovsky U.S. Bankruptcy Judge Case: 06-10188 Doc# 20 Filed: 07/18/06 Entered: 07/18/06 13:49:06 Page 2 of 2
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