Prior to Hamilton v. Lanning, another major issue that had courts divided was the question of secured debt payments being deducted on the Means Test (Form B22C) when the secured debt payment did not exist. In the Eastern District of Wisconsin, I want to briefly mention three cases:
Dionne and Clark are both Chapter 13 cases. Ross-Tousey and Clark deal with vehicles with no lien on it. Dionne deals with a vehicle that has a lien on it, but the debtors intend to surrender.
The holding in Hamilton v. Lanning permits the Court to consider changes to the debtor’s income or expenses that are known or reasonably certain. Since the surrender of a vehicle and the loss of a secured debt payment is a change in financial circumstances (and the debtor’s intent to do so is known because it is stated on the proposed Chapter 13 Plan), then it stands to reason that Lanning reverses Dionne. Clark is distinguishable in that there is no change in circumstances, the vehicle that the ownership deduction is taken for did not have a secured debt payment due at the time of filing. However, given the nature of the discussion in Lanning about a plain-reading of projected disposable income, I think that if a Clark-like case was brought in front of the U.S. Supreme Court, they would not see a distinction based on the lack of a change in circumstances. So in my legal opinion (which is just that, an opinion, until a Court rules otherwise), Dionne and Clark can be lumped together. If one is held is violation of Lanning, then I think the other one fails, too, and vice versa.
It is important to note, however, that the issue of contractually due payments and vehicle ownership deductions was not discussed in Lanning, this is merely an extrapolation of how the case law in Lanning would/should probably be applied to Dionne and Clark. This is why I included Ross-Tousey in my analysis, because the 7th Circuit is the highest legal authority which is directly addressed these questions. Otherwise, it is completely irrelevant as a Chapter 7 case, because a different standard is applicable.
I would also note that this line of cases analyzes the difference between “applicable deductions” and “actual deductions”, which is another way that Dionne and Clark might be distinguished and not overruled by Lanning.
Given that Lanning did not directly address the ownership expense issue, I would not be surprised to see this issue make its way to the U.S. Supreme Court during its 2010-2011 term. In the meantime, there are still doctrines of good faith and abuse to be considered. In my opinion, since the SCOTUS is taking the forward-looking approach, a debtor playing it safe would be wise to only take the vehicle ownership deduction if they have a vehicle with a secured debt payment.