In re Willingham

MEMORANDUM DECISION REGARDING UNITED STATES TRUSTEE’S MOTION TO DISMISS

The Ninth Circuit Bankruptcy Appellate Panel (“BAP”) recently decided that the $200 “older-vehicle operating expense” deduction is not available to chapter 13 debtors for the purpose of determining the amount of disposable income which must be paid through a chapter 13 plan to unsecured creditors pursuant to 11 U.S.C. § 1325 (b)(2). 1 In re Luedtke, 508 B.R. 408 (9th Cir. BAP 2014). In this contested matter, the court must decide whether chapter 7 debtors may still claim the older-vehicle expense deduction in the calculation of monthly disposable income on their chapter 7 means test for the purposes of determining the “presumption of abuse” issue under § 707(b)(2).

The U.S. Trustee (the “UST”) has moved to dismiss this case as a “presumed abiise” of chapter 7 pursuant to § 707(b)(2). In the alternative, the UST asks that the case be dismissed pursuant to § 707(b)(3) based on the “totality of the circumstances” because the debtors, James and Pamela Willingham (the “Debtors”), appear to have sufficient disposable income to repay all or a substantial portion of their debts through a chapter 13 plan (the…