United States Supreme Court Case - Vehicle Exemption
That this subject which we will talk about a very important topic because it will promote your Read this issue
The Supreme Court of the United States recently decided a case where a debtor attempted to shield a portion of his income for vehicle ownership costs from a Chapter 13 Bankruptcy plan. In Justice Elena Kagan's first published opinion, the Court reviewed a case of a debtor that incurred approximately $80,000 in unsecured debt. The Court ultimately held that the debtor's attempt to take advantage of $471 monthly allowance for vehicle ownership costs were not allowed because the debtor did not have a loan or lease payment.
In Chapter 13 Bankruptcy cases a debtor is required to pay a portion of his monthly income according to a court-approved plan. Under the Bankruptcy Code, the amount that the debtor is required to pay is determined by a "means test." In this means test debtors are able to deduct certain standard living expenses. These allowable expenses permit a debtor to shield his income from creditors according to the stated amount. These amounts are stated in either national or local standards.
Vehicle expenses are provided for in two sections, "Ownership Costs" and "Operating Costs." The current National "Ownership Costs" allow for a $496 monthly deduction for a single car and another $496 for a second vehicle.
Justice Kagan and the Court held that "a person cannot claim an allowance for vehicle-ownership costs unless he has some expense falling within that category." Thus, a person can take advantage of the Ownership Costs exemption only if the debtor has either a vehicle loan or lease.
In this case, the debtor owned his car free and clear of any loan or other encumbrance. Thus, he did not qualify for the exemption from the means test.
This case is extremely important not only for Chapter 13 debtors, but also for those debtors whose income falls above the median income for Chapter 7 debtors. If you own a vehicle outright, you cannot use the national ownership cost to obtain a better chance to qualify for Chapter 7.
If you have any further questions on the means test contact the Henshaw Law Office today.
Article Source: http://EzineArticles.com/?expert=David_Henshaw
Article Source: http://EzineArticles.com/5742404
That this subject which we will talk about a very important topic because it will promote your Read this issue
The Supreme Court of the United States recently decided a case where a debtor attempted to shield a portion of his income for vehicle ownership costs from a Chapter 13 Bankruptcy plan. In Justice Elena Kagan's first published opinion, the Court reviewed a case of a debtor that incurred approximately $80,000 in unsecured debt. The Court ultimately held that the debtor's attempt to take advantage of $471 monthly allowance for vehicle ownership costs were not allowed because the debtor did not have a loan or lease payment.
In Chapter 13 Bankruptcy cases a debtor is required to pay a portion of his monthly income according to a court-approved plan. Under the Bankruptcy Code, the amount that the debtor is required to pay is determined by a "means test." In this means test debtors are able to deduct certain standard living expenses. These allowable expenses permit a debtor to shield his income from creditors according to the stated amount. These amounts are stated in either national or local standards.
Vehicle expenses are provided for in two sections, "Ownership Costs" and "Operating Costs." The current National "Ownership Costs" allow for a $496 monthly deduction for a single car and another $496 for a second vehicle.
Justice Kagan and the Court held that "a person cannot claim an allowance for vehicle-ownership costs unless he has some expense falling within that category." Thus, a person can take advantage of the Ownership Costs exemption only if the debtor has either a vehicle loan or lease.
In this case, the debtor owned his car free and clear of any loan or other encumbrance. Thus, he did not qualify for the exemption from the means test.
This case is extremely important not only for Chapter 13 debtors, but also for those debtors whose income falls above the median income for Chapter 7 debtors. If you own a vehicle outright, you cannot use the national ownership cost to obtain a better chance to qualify for Chapter 7.
If you have any further questions on the means test contact the Henshaw Law Office today.
Article Source: http://EzineArticles.com/?expert=David_Henshaw
Article Source: http://EzineArticles.com/5742404
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