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Chapter 7 means test. Does a leased car get treated the same way as a financed car on means test? What about on schedule B?

Riverside, CA |
Attorney answers 4

Posted

You would certainly get the operating expense deduction. Since you don't "own" the leased car, it sounds like you might not be entitled to the "ownership" expense deduction ... but I have never had a problem taking it. The rationale, if it ever became an issue, is that you are, in fact, creating a contingent ownership interest in the car as you are creating the reduced buyout.

Gary D. Bollinger

Gary D. Bollinger

Posted

In Eastern District of MO, where I practice, claiming the ownership expense might pose a problem with claiming the lease expense in Schedule J. "Expenses" . There are points of overlap as some leases include many of the expenses of ownership.

Filemon Kevin Samson

Filemon Kevin Samson

Posted

If you don't own the car, it is not listed on Schedule B and goes on Schedule G. The monthly payment belongs on means test. You should consult with a Bankruptcy Attorney in your area regarding the proper calculations to determine whether the presumption of abuse arises. My firm has locations near you. www.SamsonLawFirm.com

Posted

Yes. While there are arguments otherwise, the lease payments are treated the same as purchase loan payments on the means test. I usually leave leased vehicle off of schedule B, but list the lease on G, and list it on item 14 of the Statement of Financial Affairs.

Posted

You don't own the car so it is not listed on Sch. B, goes on Sch.G. Yes, the monthly payment belongs on means test, IF there is an "assumption of abuse." Talk with a BK attorney.

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Posted

Generally, a leased car is not a secured debt, so you are limited to the IRS allowed ownership expense on the means test.

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