Case Conclusion Date: 03.04.2008
Practice Area: Bankruptcy & Debt
Outcome: Bankruptcy Court Reversed--Remanded
Description: United States Trustee filed a motion to dismiss chapter 7 case due to excess disposable income under section 707(b)(2). Debtors had claimed a vehicle ownership expense associated with an unencumbered vehicle. The United States Trustee argued that a vehicle ownership expense was only permissible in cases where the debtors were making monthly lease or debt service payments on the vehicle. The bankruptcy court, Judge Robert D. Berger, ruled in favor of the debtors, holding that the ownership of the vehicle rather than an encumbrance on the vehicle entitled debtors to the ownership expense. The United States Trustee appealed to the federal district court. District Judge John W. Lungstrum reversed the decision of the bankruptcy court, ruling that the vehicle ownership expense was only appropriate for vehicles encumbered by a monthly payment. In re Thomas remains the only Kansas appellate decision on this issue, which has divided bankruptcy and appellate courts around the country on an even basis.