Chapter 13 Debtors with above-median income attempted to deduct $200 in “additional operating expenses” on Line 27A of Form 22C for each of two older and high-mileage vehicles, which would have reduced the return to general unsecured creditors by $24,000 over the 60-month duration of the plan. The Debtors argued that the claimed additional operating expenses, which arise from a section of the Internal Revenue Manual dealing with offers in compromise, should be allowed as standardized deductions under § 707(b)(2)(A)(ii)(I) and the IRS Local Standards. The Chapter 13 Trustee and the Assistant U.S. Trustee argued that additional operating expenses may be allowed in appropriate circumstances but that parties in interest should be able to review the claimed expenses and object to them if appropriate. Based on the language of the statute and the Supreme Court’s recent guidance in Hamilton v. Lanning and Ransom v. FIA Card Services, N.A., the Court held that above-median chapter 13 debtors are not automatically entitled to a $200 additional operating expense deduction on Line 27A of Form 22C for each vehicle over six years old or with more than 75,000 miles. But above-median chapter 13 debtors may claim additional operating expenses that they actually incur on Line 60 of Form 22C up to $200 per vehicle subject to review and objection by the Chapter 13 Trustee and holders of allowed unsecured claims.
Creditor in a closed chapter 7 case filed an untimely complaint under § 727 seeking to revoke the debtors’ discharge, or alternatively to obtain a determination that its particular claim was not subject to discharge under § 523. The Debtors moved to dismiss the complaint as impermissibly late, and the creditor asserted that its claims remained viable under the doctrine of equitable tolling because it did not discover the facts alleged in the complaint until well after the debtors received their discharge. Based on the clear language in § 727(e)(1) and (2) and the case law concerning Rule 4007(c), the Court held that the doctrine of equitable tolling did not apply and the motion to dismiss was granted.
Chapter 13 Debtors commenced adversary proceeding to immediately and permanently void U.S. Bank’s wholly underwater junior mortgage lien on their primary residence based on both § 1322(b)(2) of the Bankruptcy Code and slander of title under Utah state law, without regard to either full payment of U.S. Bank’s claim or completion of the chapter 13 case. As for the slander of title theory, the Debtors argued that no valid lien exists under Utah law when such lien is unsupported by any present economic value. Based on the trial court and Tenth Circuit decisions in In re Woolsey and a slander of title analysis under Utah law, the Court held that wholly underwater junior mortgage liens may ultimately be removed from the property but only after full payment or completion of the chapter 13 case in accordance with § 1325(a)(5)(B) of the Bankruptcy Code.
A creditor in a chapter 13 case moved to lift the automatic stay on a parcel of real property held in trust. The creditor argued that cause existed to lift the stay under § 362(d)(1) because the property was not part of the debtor’s estate and because the debtor had no contractual relationship with the creditor with respect to the property. The Court denied the creditor’s motion, holding that under Utah law the debtor was a beneficiary of the trust and had an equitable interest in the property, which was included in the estate by § 541(a)(1). The Court then concluded that an equitable interest in the property was sufficient to claim a homestead exemption in the property, and that a lack of a contractual relationship between the debtor and the creditor was not cause to lift the stay.