Car costs in bankruptcy
Ransom v. FIA Card Services
In brief
A Chapter 13 debtor who makes no car-loan or lease payments cannot deduct car-ownership costs when the court calculates income for plan payments.
- Where it stands
- Decided
Decided 8-1 · January 11, 2011 · Opinion by Justice Kagan
- What it’s about
- The dispute over Jason Ransom’s Chapter 13 repayment plan was whether a debtor could subtract standard car-ownership costs from income available for plan payments without making car-loan or lease payments.
- Who it affects
- Chapter 13 debtors with no car-loan or lease payments cannot claim the standard ownership-cost deduction when courts calculate income available for their repayment plans.
Summary: written with AI from the case record.
What it's about
The Supreme Court ruled that a debtor who makes no such payments cannot take the deduction and agreed with the Ninth Circuit’s ruling.
Chapter 13 bankruptcy uses a debtor’s income available during a repayment plan to help determine required plan payments.
Question presented
In calculating a debtor's "projected disposable income" during a Chapter 13 bankruptcy plan period, can a bankruptcy court allow an ownership cost deduction for vehicles only if the debtor is actually making payments on the vehicles?
What the Court decided
Holding
A debtor who does not make loan or lease payments may not take the car-ownership deduction. 577 F. 3d 1026, affirmed.
- Result
- Affirmed
The vote
From the opinions
“I agree with the conclusion of the three other Courts of Appeals to address the question: that a debtor who owns a car free and clear is entitled to the car-ownership allowance.”
What's next
The Ninth Circuit’s ruling remains in place. Bankruptcy courts must deny the ownership-cost deduction when calculating plan payments for a Chapter 13 debtor who makes no car-loan or lease payments.
Documents
Opinions
Audio
Docket activity
New analysis added
AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
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Audio Recording added: Oral Arguments - Ransom
Opinion added: Ransom
More questions
- Why did Justice Scalia disagree?
- He argued that debtors who own their cars outright should still qualify for the car-ownership allowance.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.