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Related Keywords: $200 clunker allowance . 910 loans . car loans .

Case Law Topics

  • Local Standards: Vehicle Ownership/Lease expense allowance -- contingent on existence of loan or lease obligation? (i.e. if owned free and clear)

    The Supreme Court ruled in January 2011, that the Means Test Vehicle Ownership allowance is contingent on existence of loan or lease obligation. In other words, if you own a vehicle "free and clear" and are not making any payments, you cannot claim the ownership deduction. (Ransom v. FIA Card Services, __ U.S. ___ (S.Ct 2011 ) )

    Before the Supreme Court settled the issue, lower courts were split on this question.

    Note that lower court cases that deny the allowance often mention that debtors can claim a $200 extra operation deduction for vehicles over six years old with more than 75K miles (based on the IRS practice of doing the same).

  • Local Standards: Does Allowance include IRS's additional $200 allowance for Operating Expense for Older/High Mileage Vehicles?

    At one time, (before the Supreme Court ruled on the Ransom case), the court rulings and trustees routinely agreed that even if a debtor does not have lease or loan obligation, they are still entitled to an extra $200 operating expense allowance for vehicles more than 75K miles or six years old.

    This is based on the fact that the IRS follows this practice and BAPCPA uses IRS transportation spending allowances in the means test.

    However, since the Ransom case, courts have almost unanimously ruled that you can no longer take the $200 "clunker allowance," based on what the Supreme Court said in that case about

  • Secured Debt: 910 Car Loans > amount includes financing of negative equity?

    The 2005 bankruptcy amendments added a "hanging paragraph" (that is, doesn't have a separate subsection like all paragraphs should) to section 1325(a) that says that you cannot cramdown an purchase-money auto loan that was obtained less than 910 days

    The question is whether when a debtor turns in a car for a trade in, whether the part of the new car loan that is meant to pay off the balance on an old car loan in included in the amount that is by the no-cramdown protection of 1325(a)

    It is neither "all or part of the price" of a new car nor is it "value given to enable the debtor to acquire rights in or the use of" a new car

  • Secured Debt: 910 Car Loans > does surrender of undersecured property = satisfaction in full of debt?

    The issues argued in these cases are whether the hanging paragraph allows a debtor to surrender a 910 vehicle in full satisfaction of his debt. If not, then, "the remaining debt must be treated as an unsecured claim in the Chapter 13 plan. Although the debt "need not be paid in full, any more than [the debtors] other unsecured debts, [] it [cannot] be written off in toto while other unsecured creditors are paid some fraction of their entitlements." In re Miller

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