In re Phillip and Jennifer Rodriguez

Case Type:
Case Status:
United States Bankruptcy Appellate Panel of the Ninth Circuit No. NC-20-1086-TaBG (9th Circuit, Oct 16,2020) Published
The BAP affirmed the bankruptcy court’s denial of confirmation and decision to disallow vehicle operation expense over the value provided by the Local Standards set forth by the Internal Revenue Service. The BAP also clarified that it had jurisdiction over the appeal, because the interlocutory order became final when a subsequent order was entered. The Debtors’ submissions made it clear the Debtors challenged the order denying confirmation, and the Trustee suffered no prejudice from the Debtors' submissions.
Procedural context:
The Debtors filed Chapter 13 bankruptcy as above median debtors. The Chapter 13 Trustee (Trustee) objected to confirmation of the Debtors’ plan, because the Debtors’ were above median debtors and claimed a monthly vehicle operation expense in excess of the value authorized by the Local Standards put forth by the IRS. The Debtors amended their original plan, but the bankruptcy court denied confirmation and provided the Debtors the opportunity to brief the issue. The Debtor did not initially appeal this interlocutory order. At the next confirmation hearing, the Debtors’ asserted the Local Standards were only discretionary guidelines. The bankruptcy court disagreed and sustained the Trustee’s objection to confirmation. The Debtor appealed the final order denying confirmation and sustaining the Trustee’s objection to confirmation.
When the Debtors commenced their bankruptcy, they owned three vehicles and motor home and earned a combined monthly income of $13,135.00. The Debtors claimed transportation expenses of $1,000 on their original plan, not including car payments. The Debtors completed the Forms 122C-1 and 122C-2 as required under § 1325(b)(3), because their annualized income exceeded the median income for California. The Debtors claimed the IRS authorized vehicle operation expense of $424.00 and additionally claimed another $500.00 under “special circumstances.” The Debtors justified this deduction by illustrating the high commuting expense of one of the Debtors and claiming there was “no reasonable alternative.” After the Trustee’s objection, the Debtors amended their forms to remove the special circumstance and increase the vehicle operation expense to $924.00 monthly.
The Hons. Taylor, Brand, and Gan

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