Vehicle Ownership Expense in the Means Test

Vehicle Ownership Expense in the Means Test

In a bankruptcy, the means test must be completed with the debtor’s last six months of income. If the debtor is over median for their household size, additional information must be provided in the means test to see if the debtor is still eligible to file a Chapter 7 bankruptcy based on certain expenses. If they are under abuse, they can file a Chapter 7. Otherwise, they must file a Chapter 13 bankruptcy. There are certain expenses that are automatically imputed for the debtor, and then there are other expenses the debtor will receive a credit for in the means test, such as mortgage, car payments, taxes they pay, health insurance, life insurance, security expenses (security systems, etc.), and telecommunication expenses, etc.

The means test allows for a vehicle ownership expense for a vehicle in the debtor’s name. Line 22A of the means test asks for the number of vehicles the debtor operates. Lines 23 and 24 ask for the number of vehicles for which there is an operating/lease expense. For a single bankruptcy, the debtor can only claim operating/ownership expenses for one vehicle. If the debtors are filing jointly, they can claim two vehicles. The operating/lease expense can only be claimed if there is a secured lien on the vehicle that the debtor is paying. If the debtor does not have a loan on the vehicle, they are not entitled to the $517.00 operating/lease deduction. The debtor is entitled, however, to a deduction for actual expenses they incur for the vehicle. For example, if the debtor spends $200 per month on the vehicle for oil changes and repairs, that amount can be used as a deduction in the means test. If the debtor does not have regular monthly expenses for the vehicle, they are not entitled to a deduction for a vehicle with no loan against it.

If you have questions, please contact a St. Louis or St. Charles bankruptcy attorney.