Appeal from the United States Bankruptcy Court for the Eastern District of North Carolina, at Raleigh, to the United States Court of Appeals for the Fourth Circuit. The appeal  (In re Jackson, 537 B.R. 238 (Bankr. E.D.N.C. 2015, 15-01915-5-SWH) was via a joint request of the debtors and the Bankruptcy Administrator for the Eastern District of North Carolina, with a recommendation in support of the direct appeal by the bankruptcy court.

The National Association of Consumer Bankruptcy Attorneys (NACBA) filed as an Amicus Supporting the Debtors-Appellees in this matter.

The debtors' Chapter 7 petition used the National and Local Standard amounts for certain categories of expense rather than the actual amount of their expenses, which were less than the standardized amounts. The Bankruptcy Administrator moved to dismiss the petition, which was denied by the Court. The Debtors and Administrator filed jointly for the appeal. Writ was granted  to the question: "whether 11 U.S.C. 707(b)(2) permits a debtor to take the full National and Local Standard amounts for expense even though the debtor incurs actual expenses that are less than the standard amounts".

The Debtors' earned more than the median income for a family of four in North Carolina and were required to complete the means test on official forms 22A-1 and 22-A-2.  Form 22-A-2 states to set forth the amounts using the IRS National and Local Standards "regardless of your actual expenses." Based on the instructions, the debtors used the higher standards for mortgage and automobile expense rather than the actual amounts incurred. 

The Bankruptcy Administrator argued that the instructions were incorrect and that a debtor was "limited to deducting their actual expenses or the applicable National or Local Standard, whichever is less.",

The bankruptcy court concluded "that the debtors' use of the IRS Local Standard allowances for their housing and vehicle exemptions on Form 22-A comports with ...the plain language of the statue". The appellate court affirmed the holding, finding the statute's (11 U.S.C. 707(b)(2)(A)(ii)(I)) language was clear that "the debtor's monthly expenses SHALL BE the debtor's applicable monthly expense amounts SPECIFIED under the National Standards and Local Standards" if they incur an expense in that category.  (emphasis added).

The Court discussed that to find otherwise produces a result where a frugal debtor spending less than the allowable standard amounts would be penalized and receive less protection than a "prolific debtor who spent up to or beyond the cap."

Therefore "we hold a debtor is entitled to the full National and Local Standard amounts for any category of expense in which they incur a cost". The judgment of the bankruptcy count is AFFIRMED.