The Maine Bankruptcy Court issued a ruling on November 18, 2008 on the means test in the case of In re Coffin. Coffin filed a Chapter 13 bankruptcy case and filed a Chapter 13 plan. A creditor and the Chapter 13 Trustee objected to the plan on the grounds that the means test required Coffin to pay more money into his payment plan each month. The basis for the objection was that Coffin claimed he was entitled to take certain ownership deductions on the means test for two motor vehicles for which he owed no money. In other words, Coffin had no vehicle loans on the two vehicles, but he claimed "ownership" deductions which are, in theory, based upon loans on the vehicles.
The means test form used to prepare bankruptcy schedules and statements permits a deduction for the ownership costs of a motor vehicle even if there are no loans on the vehicle. There is considerable controversy among bankruptcy courts whether to allow ownership costs deductions where no vehicle loans exist on the vehicles. The Maine Bankruptcy Court concluded that if there are no vehicle loans on motor vehicles, the ownership expense may not be taken in a Chapter 13 case. The effect of the decision is that Coffin may need to pay as much a $956 more each month into his plan.
The solution to the problem may be to take a modest loan ($100) on each motor vehicle otherwise unencumbered before filing Chapter 13. As silly as this solution seems, it would appear to permit the entire $956/mo to be deducted from the debtor's income, and not require it to be included into the plan. The Bankruptcy Court decision also doesn't seem to recognize the higher operational costs of a motor vehicle where a vehicle loan has been paid off. The decision is currently on appeal.