Gloria Ann Megginson

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
In re: 	*
GLORIA ANN MEGGINSON, 	* 	Case No. 06-12034-JS
Debtor 	* 	Chapter 7
* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	*
MEMORANDUM OPINION DENYING MOTION OF THE U.S. TRUSTEE
TO DISMISS CHAPTER 7 CASE PURSUANT TO 11 U.S.C. § 707(b)(2)
The United States Trustee filed the instant motion to dismiss for presumed
abuse [P. 16] and a supplement [P. 32]. Although the motion was brought pursuant
to 11 U.S.C. § 707 (b)(2) and (b)(3), after the debtor filed amended schedules, the
movant abandoned his argument pursuant to Section 707(b)(3). 	The sole issue
remaining is whether the debtor may claim the deduction specified in the Internal
Revenue Service (“IRS”) Local Transportation Expense Standards for a motor vehicle
she 	owns 	that 	is 	not 	encumbered 	by 	any 	debt, 	pursuant 	to 	11 	U.S.C. 	§
707(b)(2)(A)(ii)(I). For the reasons stated, the Court concludes that the debtor may
do so and therefore, the motion to dismiss will be denied.
Date signed September 04, 2007
Entered: September 05, 2007 Case 06-12034 Doc 35 Filed 09/05/07 Page 1 of 23

1Section 707(b)(2) provides as follows:
§ 707. Dismissal of a case or conversion to a case under chapter 11 or 13
* 	* 	* 	*
(b)(2)(A)(i) 	In considering under paragraph (1) whether the
granting of relief would be an abuse of the provisions of this chapter, the
court shall presume abuse exists if the debtor’s current monthly income
reduced by the amounts determined under clauses (ii), (iii), and (iv), and
multiplied by 60 is not less than the lesser of–
(I) 25 percent of the debtor's nonpriority unsecured claims in the
case, or $6,000, whichever is greater; or
(II) $10,000.
(ii)(I) The debtor’s monthly expenses shall be the debtor’s
applicable monthly expense amounts specified under the National
Standards and Local Standards, and the debtor’s actual monthly expenses
for the categories specified as Other Necessary Expenses issued by the
Internal Revenue Service for the area in which the debtor resides, as in
effect on the date of the order for relief, for the debtor, the dependents of
the debtor, and the spouse of the debtor in a joint case, if the spouse is
2
FINDINGS OF FACT
1. On April 10, 2006, the debtor, Gloria Ann Megginson (“Megginson”), filed
the instant Chapter 7 bankruptcy case pro se. The Office of the United States Trustee
reviewed her schedules, statement of financial affairs and statement of current
monthly income and means test calculation, and made a determination that the
debtor’s case was presumably abusive, pursuant to Section 707(b)(2) of the U.S.
Bankruptcy Code. 1
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not otherwise a dependent. 	Such expenses shall include reasonably
necessary health insurance, disability insurance, and health savings
account expenses for the debtor, the spouse of the debtor, or the
dependents of the debtor. Notwithstanding any other provision of this
clause, the monthly expenses of the debtor shall not include any
payments for debts. 	In addition, the debtor’s monthly expenses shall
include the debtor's reasonably necessary expenses incurred to maintain
the safety of the debtor and the family of the debtor from family violence
as identified under section 309 of the Family Violence Prevention and
Services Act, or other applicable Federal law. The expenses included in
the debtor’s monthly expenses described in the preceding sentence shall
be kept confidential by the court. In addition, if it is demonstrated that
it is reasonable and necessary, the debtor’s monthly expenses may also
include an additional allowance for food and clothing of up to 5 percent
of the food and clothing categories as specified by the National
Standards issued by the Internal Revenue Service.
(II) In addition, the debtor’s monthly expenses may include, if
applicable, the continuation of actual expenses paid by the debtor that are
reasonable and necessary for care and support of an elderly, chronically
ill, or disabled household member or member of the debtor’s immediate
family 	(including 	parents, 	grandparents, 	siblings, 	children, 	and
grandchildren of the debtor, the dependents of the debtor, and the spouse
of the debtor in a joint case who is not a dependent) and who is unable
to pay for such reasonable and necessary expenses.
(III) In addition, for a debtor eligible for chapter 13, the debtor’s
monthly expenses may include the actual administrative expenses of
administering a chapter 13 plan for the district in which the debtor
resides, up to an amount of 10 percent of the projected plan payments,
as determined under schedules issued by the Executive Office for United
States Trustees.
(IV) In addition, the debtor's monthly expenses may include the
actual expenses for each dependent child less than 18 years of age, not
to exceed $1,500 per year per child, to attend a private or public
3
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elementary or secondary school if the debtor provides documentation of
such expenses and a detailed explanation of why such expenses are
reasonable and necessary, and why such expenses are not already
accounted for in the National Standards, Local Standards, or Other
Necessary Expenses referred to in subclause (I).
(V) In addition, the debtor’s monthly expenses may include an
allowance for housing and utilities, in excess of the allowance specified
by the Local Standards for housing and utilities issued by the Internal
Revenue Service, based on the actual expenses for home energy costs if
the 	debtor 	provides 	documentation 	of 	such 	actual 	expenses 	and
demonstrates that such actual expenses are reasonable and necessary.
(iii) The debtor’s average monthly payments on account of
secured debts shall be calculated as the sum of–
(I) the total of all amounts scheduled as contractually due to
secured creditors in each month of the 60 months following the date of
the petition; and
(II) any additional payments to secured creditors necessary for the
debtor, in filing a plan under chapter 13 of this title, to maintain
possession of the debtor’s primary residence, motor vehicle, or other
property necessary for the support of the debtor and the debtor’s
dependents, that serves as collateral for secured debts; divided by 60.
(iv) The debtor’s expenses for payment of all priority claims
(including priority child support and alimony claims) shall be calculated
as the total amount of debts entitled to priority, divided by 60.
(B)(i) In any proceeding brought under this subsection, the
presumption of abuse may only be rebutted by demonstrating special
circumstances, such as a serious medical condition or a call or order to
active duty in the Armed Forces, to the extent such special circumstances
that justify additional expenses or adjustments of current monthly
income for which there is no reasonable alternative.
4
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(ii) In order to establish special circumstances, the debtor shall be
required to itemize each additional expense or adjustment of income and
to provide –
(I) documentation for such expense or adjustment to income; and
(II) a detailed explanation of the special circumstances that make
such expenses or adjustment to income necessary and reasonable.
(iii) The debtor shall attest under oath to the accuracy of any
information 	provided 	to 	demonstrate 	that 	additional 	expenses 	or
adjustments to income are required.
(iv) The presumption of abuse may only be rebutted if the
additional expenses or adjustments to income referred to in clause (i)
cause the product of the debtor’s current monthly income reduced by the
amounts determined under clauses (ii), (iii), and (iv) of subparagraph (A)
when multiplied by 60 to be less than the lesser of–
(I) 25 percent of the debtor's nonpriority unsecured claims, or
$6,000, whichever is greater; or
(II) $10,000.
(C) As part of the schedule of current income and expenditures
required under section 521, the debtor shall include a statement of the
debtor's current monthly income, and the calculations that determine
whether a presumption arises under subparagraph (A)(i), that show how
each such amount is calculated.
(D) Subparagraphs (A) through (C) shall not apply, and the court
may not dismiss or convert a case based on any form of means testing,
if the debtor is a disabled veteran (as defined in section 3741(1) of title
38), and the indebtedness occurred primarily during a period during
which he or she was–
5
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(i) on active duty (as defined in section 101(d)(1) of title 10); or
(ii) performing a homeland defense activity (as defined in section
901(1) of title 32).
11 U.S.C. § 707(b)(2).
6
2. On June 6, 2006, the U. S. Trustee filed a Statement of Presumed Abuse [P.
14], which contained the following statement:
As required by 11 U.S.C. Sec. 704(b)(1)(A), the United States Trustee
has reviewed the materials filed by the debtor(s). Having considered
these materials in reference to the criteria set forth in 11 U.S.C. Sec.
707(b)(2)(A), and, pursuant to 11 U.S.C. Sec. 704(b)(2), the United
States Trustee has determined that: (1) the debtor’s(s’) case should be
presumed to be an abuse under section 707(b); and (2) the product of the
debtor’s current monthly income, multiplied by 12, is not less than the
requirements specified in section 704(b)(2)(A) or (B). As required by 11
U.S.C. Sec. 704(b)(2) the United States Trustee shall, not later than 30
days after the date of this Statement’s filing, either file a motion to
dismiss or convert under section 707(b) or file a statement setting forth
the reasons the United States Trustee does not consider such a motion to
be appropriate. Debtor(s) may rebut the presumption of abuse only if
special circumstances can be demonstrated as set forth in 11 U.S.C. Sec.
707(b)(2)(B). Filed by US Trustee – Baltimore 11. (Levin, Katherine)
Id.
3. On July 6, 2006, the U.S. Trustee filed the instant motion to dismiss [P. 16],
pursuant to Section 707(b)(2) and (b)(3), and stated the following grounds: (1)
because of the obvious inaccuracies contained in the debtor-prepared Chapter 7
Statement of Current Monthly Income and Means Test Calculation, the U.S. Trustee
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prepared its own means test calculation that indicated the debtor’s annual income to
be $49,800, above the $48,205 state median income for a household of one; (2) the
debtor listed her son as a dependent, although he is 37 years old and not disabled; (3)
the U.S. Trustee calculated that the debtor has monthly disposable income of $327,
which multiplied by 60 equals $19,620, greater than $10,000, at which point 11
U.S.C. § 707(b)(2)(A)(1) contains a presumption of abuse; (4) the totality of the
circumstances indicates that the debtor’s financial situation demonstrated abuse
because her schedules were inaccurate and incomplete, (for example, in her Statement
of Financial Affairs she stated that she had no income for the years 2004, 2005 and
2006, while she stated in Schedule I that she has been employed by the Social Security
Administration for nine years; in her Statement of Financial Affairs, she stated that
she had made no payment to a creditor greater than $600 in the three months
prepetition, while in Schedule J, she indicated that she has a monthly mortgage
payment of $445; she indicated in Schedule A that she owns no real estate, even
though she is the sole owner of real property located at 123 N. Culver Street; she
stated in Schedule D that she had no secured creditors, but indicated in Schedule J that
she pays a monthly mortgage obligation; on Schedule J she listed a $150 child support
obligation, but her only dependent listed on Schedule I is 37 years of age. Id.
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2 A hearing on the motion was originally scheduled for August 21, 2006, but
documents produced by the debtor shortly before that date caused the U.S. Trustee to
request that the hearing be postponed in order that the documents might be considered.
3On Schedule B, the debtor listed an automobile described as a “1997 Cougar,”
but did not list a secured creditor on Schedule D or a car payment on Schedule J. Id.
8
4. On August 15, 2006, counsel for the debtor filed her appearance [P. 19]. The
following day, the debtor through counsel filed Amended Schedules A, C, D, E, I and
J [P. 21], an Amended Statement of Financial Affairs [P. 23], an Amended Statement
of Intent [P. 24], an Amended Chapter 7 Statement of Current Monthly Income and
Means Test Calculation [P. 25], and an Opposition [P. 22] to the motion to dismiss.
The various amendments prompted the U.S. Trustee to abandon Section 707(b)(3) as
the basis for the motion, but it continued to press the motion based 	upon Section
707(b)(2).2
5. On September 22, 2006, the U.S. Trustee filed a Supplement to the motion
to dismiss [P. 32], in which it contended that the case continues to represent an abuse
because (1) the debtor claimed a $471 deduction for an ownership/lease expense on
line 23 of her means test calculation; (2) she is not entitled to claim such a deduction
because her schedules reflect that she is neither leasing a vehicle nor making a car
payment;3 (3) the deduction is only allowed for debtors who are making car payments
or lease payments on an automobile; (4) because the listed vehicle is more than six
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9
years old, the debtor is entitled to a $200 per month deduction; (5) even with the $200
deduction, the case remains presumptively abusive because the debtor has 60-month
disposable income of $17,795, as indicated by the comparative means test analysis
prepared by the U.S. Trustee as an attachment to the Supplement.
6. On October 2, 2006, counsel for the debtor filed a response [P. 34] to the
Supplement, in which she contended that the debtor is entitled to deduct the $471 she
listed on line 23 of her Amended Form B 22A, according to the plain language of
Section 707(b)(2)(A)(ii)(I).
7. Finally, counsel for the debtor argued that the “debtor has minimal disposable
income,” because she has certain special circumstances, including health problems and
an old car that requires extensive repairs and ultimately a replacement vehicle, she is
not a viable candidate for Chapter 13. At the hearing, counsel requested further time
to present documentation regarding the state of the debtor’s health and the required
motor vehicle repairs. The Court permitted the debtor to file such documentation after
the hearing.
8. The health documentation submitted indicated that the debtor suffers from
diabetes, carpal tunnel syndrome and a deteriorating ulnar joint. 	There is no
indication of permanent, total or partial disability.
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4The means test is set forth in Section 707(b)(2)(A)(i), quoted in footnote one.
10
9. With respect to her automobile, the debtor presented two repair estimates,
one in the amount of $3,600, the other for $1,494.
10. The Court concludes from the debtor’s schedules and post-trial submissions
that she is a single debtor with no dependents and therefore constitutes a household
of one; that she owns one unencumbered motor vehicle, a 1997 automobile; that she
is employed and receives an annual income of $52,332; and that she has some health
problems that cause her discomfort, limit her physical activity and require medical
attention and treatment.
CONCLUSIONS OF LAW
1. 	This is a core proceeding over which this Court has subject matter
jurisdiction to render a final decision. 28 U.S.C. §§ 157(b) and 1334.
2. 	The instant case is subject to the requirements of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, (Pub. L. 109-8, 119 Stat. 23,
enacted April 20, 2005), known as “BAPCPA,” which became effective on October
17, 2005.
3. 	BAPCPA contains provisions that require individual debtors who file a
bankruptcy petition to perform a means test4 in order to qualify for relief under
Chapter 7. The purpose of the means test is to determine that consumer debtors are
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5Amended Schedule D (Creditors Holding Secured Claims) indicates a first
mortgage and another encumbrance on the debtor’s residence totaling $70,900,
leaving a thin equity cushion in the amount of $2,100, which the debtor claimed as
exempt in Amended Schedule C. 	Schedule F (Creditors Holding Unsecured
Nonpriority Claims) lists consumer debts in the total amount of $25,190.38. Id.
6Current monthly income is defined by the Code as “the average monthly
income from all sources that the debtor receives (or in a joint case the debtor and the
debtor’s spouse receive) without regard to whether such income is taxable income,
derived during the 6-month period ending on the last day of the calendar month
immediately preceding the date of the commencement of the case if the debtor files
the schedule of current income required by section 521(a)(1)(B)(ii); or (ii) the date on
which current income is determined by the court for purposes of this title if the debtor
does not file the schedule of current income required by section 521(a)(1)(B)(ii); and
includes any amount paid by any entity other than the debtor (or in a joint case the
debtor and the debtor’s spouse), on a regular basis for the household expenses of the
debtor or the debtor’s dependents (and in a joint case the debtor's spouse if not
otherwise a dependent), but excludes benefits received under the Social Security Act,
payments to victims of war crimes or crimes against humanity on account of their
status as victims of such crimes, and payments to victims of international terrorism (as
defined in section 2331 of title 18) or domestic terrorism (as defined in section 2331
11
actually in need of Chapter 7 relief and cannot afford to pay creditors in a Chapter 13,
thereby preventing abuse of the bankruptcy system.
4. 	The Code defines “consumer debt” as “debt incurred by an individual
primarily for a personal, family, or household purpose.” 11 U.S.C. § 101(8).
5. Ms. Megginson is a consumer debtor. A review of her schedules indicates
that all of the debts she owes are consumer debts. 5
6. The first step in the means test requires the debtor to compute her current
monthly income6 calculated according to the number of members of her household,
Case 06-12034 Doc 35 Filed 09/05/07 Page 11 of 23

of title 18) on account of their status as victims of such terrorism.” 	11 U.S.C. §
101(10A).
12
multiply that number by 12 to obtain her annual income, and then compare that
number to the annual median income of the state in which the debtor resides.
Assuming that the debtor’s annual income as computed is less than or equal to the
annual median income of the resident state, no presumption of abuse arises and the
debtor qualifies for Chapter 7 relief, without further calculation.
7. According to the debtor’s calculations, her current monthly income without
exclusions was $4,361. This figure is not in dispute. When that figure is multiplied
by 12, the resulting number of $52,332 is obtained. When the instant case was filed,
the median income for a Maryland household of one was $48,205. 	Because the
debtor’s annualized income for a household of one is higher than the median income
for “1 earner,” the debtor must complete the remainder of Form B 22A in order to
rebut the presumption of abuse and qualify for Chapter 7. 11 U.S.C. § 707(b)(7).
8. After all deductions and exclusions, the debtor indicated on her Amended
Form B 22A that she has monthly disposable income of $45.88, which multiplied by
60 months equals 60-month disposable income of $2,752.80.
9. Where the 60-month disposable income of a Chapter 7 debtor is greater than
$10,000, the Code provides that a presumption of abuse arises. Because the debtor
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7In the context of a Chapter 13 case, Chief Judge Keir of this Court held in In
re Watson, 366 B.R. 523 (Bankr. D.Md. 2007), that a debtor’s projected disposable
income may be reduced by the local ownership allowance afforded under the Manual
when the vehicle was unencumbered, thereby endorsing the position taken on the issue
by In re Fowler, supra.
13
has indicated 60-month disposable income of only $2,752.80, the presumption of
abuse is not apparent in the instant case.
10. The U.S. Trustee argued that the instant case is abusive because the debtor
was not entitled to deduct the full amount of $471 allowed by the IRS Local Standards
for a motor vehicle she owns because it is not encumbered and she has no obligation
to make car payments to retain the vehicle. 	The U.S. Trustee reads the IRS Local
Standards to allow the debtor to take a deduction of only $200 as the owner of an
unencumbered vehicle.
11. 	Section 5.15.1.74B of the IRS Manual (the “Manual”) provides that a
debtor may deduct from her disposable income an allowance for transportation
expenses. 	In the case of In re Fowler, 349 B.R. 414 (Bankr. D. Del. 2006), Chief
Judge Walrath held that the plain language of Section 707(b)(2)(A)(ii)(1) entitled a
debtor to claim the full amount of the deduction, even if the vehicle was not subject
to a security interest that required the debtor to make car payments. 7 Accord, In re
Chamberlain, 369 B.R. 519 (Bankr. D. Ariz. 2007); In re Wilson, 356 B.R. 114
(Bankr. D. Del. 2006); In re Hartwick, 352 B.R. 867 (Bankr. D. Minn. 2006); In re
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14
Ragle, 2007 WL 1119632 (Bankr. E.D. Ky. 2007); In re Enright, 2007 WL 748432
(Bankr. M.D. N.C. 2007); In re Zak, 361 B.R. 481 (Bankr. N.D. Ohio 2007).
12. In opposition, the U.S. Trustee cited the cases of In re Hardacre, 338 B.R.
718 (Bankr. N.D. Tex. 2006); In re Oliver, 350 B.R. 294 (Bankr. W.D. Tex. 2006);
In re Wiggs, 2006 WL 2246432 (Bankr. N.D. Ill. 2006); In re McGuire, 342 B.R. 608
(Bankr. W.D. Mo. 2006); In re Demonica, 345 B.R. 895 (Bankr. N.D. Ill. 2006), and
In re Harris, 353 B.R. 304 (Bankr. E.D. Okla. 2006), all of which hold that debtors
may not claim the automobile deduction in the absence of having to make a car
payment to a secured creditor or an automobile lease payment.
13. This Court agrees with the cases that hold that debtors are entitled to claim
the full amount of the transportation exclusion regardless of whether or not they are
obligated to make car payments. The Court finds persuasive the following analysis
of the question by Judge Thomas W. Waldrep, Jr., in In re Enright, supra:
The issue before the Court concerns Section 707(b)(2)(A)(ii)(I),
which provides, in part:
The debtor's monthly expenses shall be the debtor's
applicable monthly expense amounts specified under the
National Standards and Local Standards, and the debtor's
actual monthly expenses for the categories specified as
Other Necessary Expenses issued by the Internal Revenue
Service for the area in which the debtor resides, as in effect
on the date of the order for relief[.]
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15
11 U.S.C. § 707(b)(2)(A)(ii)(I).
The National Standards and Local Standards are “the Collection
of Financial Standards used by the Internal Revenue Service (the ‘IRS’)
to determine a taxpayer’s ability to pay a delinquent tax liability.” In re
Fowler, 349 B.R. 414, 416 (Bankr. D. Del. 2006). 	The National
Standards set forth amounts for five categories of expenses: (1) food, (2)
housekeeping supplies, (3) apparel and services, (4) personal care
products and services, and (5) miscellaneous. Internal Revenue Manual,
§ 5.15.1.8 (May 1, 2004). 	The Local Standards set forth amounts for
housing 	and 	transportation 	expenses. 	Id. 	at 	§ 	5.15.1.9. 	The
transportation expenses are divided into two categories, operating
allowance and ownership allowance for up to two vehicles. 	Id. at §
5.15.1.7.
In this case, the Debtor took the ownership allowance for a vehicle
that is owned free of any liens or leases. 	The Trustee asserts that to
claim the ownership allowance, the Debtor must be making a loan or
lease payment on the vehicle. The Debtor asserts that the plain language
of Section 707(b)(2)(A)(ii)(I) provides that she can take the ownership
allowance if she owns a vehicle, irrespective of whether or not the
vehicle is owned free of any liens. A number of courts have considered
this issue, and there is a split of authority. On one side are the courts that
deny the use of the ownership allowance where the debtor owns a
vehicle 	free 	and 	clear 	of 	liens. 	See 	In 	re 	Slusher, 	No.
BK-S-06-10435-BAM, 2007 WL 118009, at * 14 (Bankr. D. Nev.
Jan.17, 2007); In re Devilliers, No. 06-10415, 2007 WL 92504, at *14
(Bankr. E.D. La. Jan. 9, 2007); In re Harris, 353 B.R. 304, 309-10
(Bankr. E.D. Okla.2006); In re Oliver, 350 B.R. 294, 301 (Bankr. W.D.
Tex. 2006); In re Carlin, 348 B.R. 795, 797 (Bankr. D. Or. 2006); In re
Wiggs, No. 06-B-70203, 2006 WL 2246432, at *3 (Bankr. N.D. Ill. Aug.
4, 2006); In re Lara, 347 B.R. 198, 201 (Bankr. N.D. Tex. 2006); In re
Barraza, 346 B.R. 724, 727-29 (Bankr. N.D. Tex. 2006); In re McGuire,
342 B.R. 608, 613 (Bankr. W.D. Mo. 2006); In re Hardacre, 338 B.R.
718, 728 (Bankr. N.D. Tex. 2006). On the other side are the courts that
permit a debtor who owns a vehicle free of liens to take the ownership
allowance. 	See In re Sorrell, --- B.R. ----, 2007 WL 211276, at * 17
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(Bankr. S.D. Ohio Jan. 26, 2007); In re Zak, --- B.R. ----, 2007 WL
143065 at *7 (Bankr. M.D. Ohio Jan. 12, 2007); In re Crews, No.
06-10422C-13G, 2006 WL 3782865, at *1 (Bankr. M.D. N.C. Dec.
22.2006); In re Wilson, 356 B.R. 114, 119 (Bankr. D. Del. 2006); In re
Haley, 354 B.R. 340, 344 (Bankr. D. N.H. 2006); In re Prince, No.
06-10328C-7G, 2006 WL 3501281, at *4 (Bankr. M.D. N.C. Nov.30,
2006); In re Grunert, 353 B.R. 591, 594 (Bankr. E.D. Wis. 2006); In re
Hartwick, 352 B.R. 867, 868-69 (Bankr. D. Minn. 2006); In re Fowler,
349 B.R. at 419; In re Demonica, 345 B.R. 895, 905 (Bankr. N.D. Ill.
2006); see also In re Farrar-Johnson, 353 B.R. 224, 230-31 (Bankr.
N.D. Ill. 2006)(using the same reasoning that would apply to the
ownership allowance, the court held that a debtor may take the housing
allowance under the Local Standards even if the debtor does not incur a
rent or mortgage expense).
A. Cases Denying the Ownership Allowance for Vehicles Owned Free
of Liens
1. Internal Revenue Publications
In the landmark decision on this issue, Judge Nelms looked to the
Internal Revenue Manual (the “IRM”) and the Collection Financial
Standards to aid in the interpretation of Section 707(b)(2)(A)(ii)(I). In
re Hardacre, 338 B.R. at 726. The court reasoned that “[b]ecause the
Local Standards are issued by the Internal Revenue Service, it is
instructive to refer to publications of that organization for guidance as to
the types of ‘debt payments' that can reduce allowances under the Local
Standards.” Id. at 726. With respect to the Local Standard amounts, the
Collection Financial Standards state that “[t]he ownership costs provide
maximum allowances for the lease or purchase of up to two automobiles
if allowed as a necessary expense.” 	Id. at 728 (quoting Collection
Financial 	Standards, 	www.irs.gov/individuals/article/0,,id=96543,
00.html). The court then held that “[b]ecause the Local Standards only
provide for a deduction for automobiles that are subject to lease or
purchase, they do not permit a debtor to claim an ownership deduction
for a vehicle owned free and clear by the debtor.” Id. at 728.
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Other courts agreed with the reasoning in Hardacre and also used
IRS publications for guidance. See In re Oliver, 350 B.R. at 301; In re
Carlin, 348 B.R. at 798; In re McGuire, 342 B.R. at 612. In McGuire,
the court relied on the IRM, which provides that “ ‘if a taxpayer has a car
payment, the allowable ownership cost added to the allowable operating
cost equals the allowable transportation expense,’ but ‘if a taxpayer has
no car payment, only the operating cost portion of the transportation
standard is used to figure the allowable transportation expense.’” Id. at
613. (quoting IRM, Financial Analysis Handbook § 5.15.1.7(4)(b)).
Based on the IRM language and Hardacre, the court held that the
debtors could not take the ownership allowance because their vehicle
was owned free of liens. Id. at 613-14.
2. Plain Language
In addition to using the IRS publications for guidance, courts have
interpreted the plain language of the statute as prohibiting the use of the
ownership allowance when the debtor owns a vehicle free of liens. In
Wiggs, the court found it unnecessary to look to the IRM for guidance,
and instead looked at the language of Section 707(b)(2)(A)(ii)(I). In re
Wiggs, 2006 WL 2246432 at *2. 	The court determined that “the
language of the statute is clear and unambiguous.” Id. It found that “the
term ‘applicable’ modifies the amounts specified to limit the expenses
to only those that apply.” 	Id. 	The court went on to point out that by
interpreting the statute as allowing every debtor to claim the full
ownership amount would make the term “applicable” “superfluous.” Id.
Therefore, the court held that the debtor was not allowed to take the
ownership allowance when the debtor did not have a vehicle payment.
Id. at 3. Other courts profess to base their opinions on the plain language
of the statute, but they do so by looking to the IRS publications for
guidance. See In re Harris, 2006 WL 293389, at *3; In re Carlin, 348
B.R. at 797-98; In re McGuire, 342 B.R. at 613.
B. Cases Allowing the Ownership Allowance When the Vehicle is Free
of Liens
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Other courts have rejected the use of IRS publications for
guidance. Instead, they have based their opinions largely on the plain
language of the statute and the relevant legislative history.
1. Plain Language
In Farrar-Johnson, the court considered the plain language of the
statute, specifically looking at the use of the term “applicable.” 	In re
Farrar-Johnson, 353 B.R. at 230-31. The court found that the term read
in 	isolation 	was 	ambiguous 	and 	means 	simply 	“can 	be 	applied;
appropriate.” Id. at 230. However, the court noted that statutory terms
should never be read in isolation, but instead must be “read in the context
in which they appear.” Id. When the court looked at “applicable” within
the context of Section 707(b)(2)(A)(ii)(I), it found that “Congress drew
a distinction in the statute between ‘applicable’ expenses on the one hand
and ‘actual’ expenses on the other.” Id. Therefore, expenses under the
Local Standards only need to be applicable to the debtor, “because of
where he lives and how large his household is. It makes no difference
whether he ‘actually’ has them.” 	Id. at 231. 	The court in Hartwick
echoed this plain language interpretation in its determination that a
straightforward 	reading 	of 	the 	statute 	provides 	that 	the 	debtor’s
ownership allowance is the higher of the debtor’s actual expenses or the
Standard amounts. 	In re Hartwick, 352 B.R. at 869. The court found
that the reading does not change when the debtor’s actual vehicle
payment is zero. Id. Other courts have also found that the plain language
of the statute is unambiguous and reached the same result. In re Wilson,
356 B.R. at 119-21; In re Prince, 2006 WL 3501281, at *2; In re
Grunert, 353 B.R. at 594; In re Fowler, 349 B.R. at 419.
2. Legislative History
Although the Fowler court based its holding on the plain language
of Section 707(b)(2)(A)(ii)(I), it also found support for its decision in the
legislative history. In re Fowler, 349 B.R. at 419. The court noted that
in a prior version of BAPCPA that was never passed Congress defined
“projected monthly net income” to require the following calculation of
expenses:
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(A) the expense allowances under the applicable National
Standards, Local Standards, and Other Necessary Expenses
allowance (excluding payments for debts) for the debtor ...
in the area in which the debtor resides as determined under
the 	Internal 	Revenue 	Service 	financial 	analysis 	for
expenses in effect as of the date of the order for relief.
Id. at 419 (quoting H.R. 3150, 105th Congress (1998)). The language
referring to the IRS financial analysis was changed to the current
language of Section 707(b)(2)(A)(ii)(I), which simply provides that the
debtor can take the “applicable monthly expense amounts specified
under the National and Local Standards.” 	Id. at 419. 	The court
concluded that this change from the prior version requiring the use of the
IRS financial analysis to the current version merely referring to the
monthly expense amounts “evidences Congress' intent that the Courts
not be bound by the financial analysis contained in the IRM and lends
credence to the Court’s conclusions that it should look only to the
amounts set forth in the Local Standards.” Id.
3. Why Using the IRM Is Inappropriate
In addition to the plain language of the statute and the legislative
history, several courts have addressed why the use of the IRM is
inappropriate to interpret the means test. The National Standards and
Local Standards provide amounts that are used by the IRS to determine
a taxpayer’s ability to pay delinquent taxes. 	In re Fowler, 349 B.R. at
416. These amounts are caps, to which taxpayers are allowed the lesser
of the Standard amount or the actual expense. 	In re Prince, 2006 WL
3501281, at *3; In re Hartwick, 352 B.R. at 869; In re Fowler, 349 B.R.
at 417. 	However, in bankruptcy the debtor is allowed the amount
specified in the Local Standards for that category or the amount that the
debtor actually incurred, whichever is higher. 	In re Prince, 2006 WL
3501281, at *3; In re Hartwick, 352 B.R. at 869; In re Fowler, 349 B.R.
at 417. In his article, Judge Wedoff also looked at the inappropriate use
of the IRM in determining the ownership expense amount. He stated that
since the IRM treats the Local Standards as caps, it follows logically
that,
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if a taxpayer has no car payments, the taxpayer obviously
cannot claim a Local Standard amount intended to cap
actual car payment expenses. 	However, since the means
test treats the Local Standards not as caps but as fixed
allowances, it is more reasonable to permit a debtor to
claim the Local Standards ownership expense based on the
number of vehicles the debtor owns or leases, rather than
on the number for which the debtor makes payments.
Eugene R. Wedoff, Means Testing in the New World, 79 Am.Bankr. L.J.
231, 256-67 (Spring 2006). Therefore, it makes little sense to look to the
analysis provided in the IRM, because that publication uses the Standard
amounts for a completely different purpose than the purpose for which
Congress intended them to be used under BAPCPA.
C. The Case Before the Court
While there are strong arguments on both sides of this issue, this
Court holds that allowing the Debtor to take the ownership allowance on
her vehicle, which is owned free of liens, is the correct interpretation. In
reaching this conclusion, the Court rests its holding on the plain
language of Section 707(b)(2)(A)(ii)(I) of the Bankruptcy Code.
In discerning congressional intent, courts must start by looking to
the plain language of the statute. 	Lamie v. United States Tr., 540 U.S.
526, 533, 124 S. Ct. 1023, 157 L. Ed.2d 1024 (2004). 	“Courts must
presume that a legislature says in a statute what it means and means in
a statute what it says there.” Connecticut National Bank v. Germain, 503
U.S. 249, 253-54, 112 S. Ct. 1146, 117 L. Ed.2d 391 (1992). Therefore,
if the terms of the statute are unambiguous, the “judicial inquiry is
complete,” and the court's job is simply to enforce those terms. Id.
Section 707(b)(2)(A)(ii)(I) provides that “[t]he debtor’s monthly
expenses shall be the debtor’s applicable monthly expense amounts
specified under the National Standards and Local Standards[.]” 	11
U.S.C. § 707(b)(2)(A)(ii)(I). 	If the Court was to look at the term
“applicable” in isolation, it would concede that the statute could be
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viewed as ambiguous. However, the Court must look at the statute as a
whole and not merely as individual isolated phrases. 	United States v.
Morton, 467 U.S. 822, 828, 104 S. Ct. 2769, 81 L. Ed.2d 680 (1984).
Therefore, the Court must consider the next phrase in that section where
the term “actual” refers to “Other Necessary Expenses.” 	11 U.S.C. §
707(b)(2)(A)(ii)(I). Since the terms “applicable” and “actual” are used
in the same sentence with each modifying a different type of expense, it
would make little sense to interpret them as meaning the same thing.
Instead, a more logical explanation is that Congress used two different
terms to achieve two different results. 	See In re Farrar-Johnson, 353
B.R. at 230-31; In re Fowler, 349 B.R. at 418.
If the two terms do not mean the same thing, and “actual” means
the expenses the debtor incurred, then “applicable” must refer to
something different. 	One definition of “applicable” is, “applying or
capable of being applied; relevant; appropriate.” 	The Random House
College Dictionary 65 (rev. ed.1980). This definition makes sense in the
context of Section 707(b)(2)(A)(ii)(I), because except for the ownership
allowance, the other amounts listed in the National Standards and Local
Standards are contingent on where the debtor lives. 	U.S. Trustee
P r o g r a m , 	M e a n s 	T e s t i n g , 	a v a i l a b l e 	a t
http://www.usdoj.gov/ust/eo/bapcpa/20061001/ meanstesting.htm (last
visited Feb. 1, 2007). By referring to the “applicable monthly expense
amounts under the National Standards and Local Standards,” Congress
was directing debtors to the amounts specific to the area in which they
live. 	Congress used “applicable” to refer to geographical area of the
debtor and “actual” to refer to “Other Necessary Expenses” that the
debtor in fact incurred. This interpretation of “applicable” is consistent
with the plain language of the statute. 	Therefore, a plain reading of
“applicable monthly expense amounts” in Section 707(b)(2)(A)(ii)(I)
refers to the expense amounts under the National Standards and Local
Standards for the geographical area in which the debtor lives.
This 	same 	analysis 	was 	used 	in 	Demonica, 	Fowler,
Farrar-Johnson, and Haley, and by other courts, to reach the same
conclusion. 	Additionally, 	Judge 	Wedoff 	addressed 	the 	issue 	of
allowances in his article and found that:
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a plain reading of the statute would allow a deduction of the
amounts listed in the Local Standards even where the
debtor'’s actual expenses are less. 	Thus, as with the
allowances of the National Standards, even if the debtor’s
transportation and housing needs were actually satisfied
without cost to the debtor, 707(b)(2)(A)(ii)(I) would allow
the debtor a deduction in the amounts specified in the
IRM’s Local Standards.
Eugene R. Wedoff, Means Testing in the New World, 79 Am. Bankr.L.J.
231, 255 (Spring 2006) (footnotes omitted).
Although the Court finds that the plain language of the statute is
clear, even if it was ambiguous, the result would not change. Where a
statute is ambiguous, a court may look to the legislative history for
guidance in order to determine Congress' intent. United States v. Irvin,
2 F.3d 72, 76 (4th Cir.1993), cert. denied, 510 U.S. 1125, 114 S. Ct.
1086, 127 L. Ed.2d 401 (1994).
In re Enright, 2007 WL 784432, at * 2-6.
For these reasons, the motion of the U.S. Trustee to dismiss the instant case for
abuse will be DENIED.
ORDER ACCORDINGLY.
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cc: 	Office of the United States Trustee
2625 U.S. Courthouse
101 West Lombard Street
Baltimore, Maryland 21201
Ms. Gloria Ann Megginson
P.O. Box 11531
Baltimore, Maryland 21229
S. D. Raysor-Taylor, Esquire
Law Office of Raysor-Taylor
One East Lexington St., Ste. 501
Baltimore, Maryland 21202
Marc H. Baer, Esquire
3545 Chestnut Avenue+
Baltimore, Maryland 21211
Chapter 7 Trustee
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