December 15, 2019

Supreme Court Hands Credit Card Companies a Big Win

auto ownership expense denied in means testYesterday, the U.S. Supreme Court issued a creditor friendly decision in the case of Ransom v. Fia Card Services.  At issues was the “ownership expense” deduction in the means test.

The means test is a calculation used to determine whether a debtor has enough “disposable income” to afford a Chapter 13 repayment plan.

In the Ransom case, the debtor (Jason Ransom) claimed a means test deduction for both operation of a vehicle ($338 per month) and for ownership ($471 per month).  The problem – Mr. Ransom owned his vehicle free and clear.

In an 8-1 decision written by Obama appointee Elena Kagan (the lone dissent issued by conservative Justice Scalia), the Supreme Court held that a debtor who owns his vehicle free and clear can only claim a deduction for vehicle operation but not a deduction for ownership. [Read more…]

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