Ransom v. FIA Card Services, N. A.
131 S. Ct. 716
| SCOTUS | 2011Background
- Chapter 13 uses a means test to determine disposable income for plan payments.
- Debtor owns a car free and clear and does not incur loan/lease payments.
- Local Standards include Ownership Costs (car loans/leases) and Operating Costs (other car expenses).
- Ransom claimed $471 Ownership Costs and $338 Operating Costs, yielding $210.55 monthly disposable income.
- Bankruptcy court and courts below disagreed on whether Ownership Costs may be claimed when no loan/lease exists; Ninth Circuit affirmed that it cannot be claimed.
- Court grants certiorari to resolve split on interpretation of “applicable” in the means test under BAPCPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ownership Costs may be claimed if debtor has no car loan/lease | Ransom: Ownership Costs are applicable if the table covers the debtor. | Court: Ownership Costs only apply if debtor incurs loan/lease costs. | No; ownership deduction not applicable without a qualifying expense. |
| Meaning of “applicable” in §707(b)(2)(A)(ii)(I) | Ransom: ‘applicable’ refers to any box corresponding to debtor’s situation. | Court: ‘applicable’ filters who may claim the deduction based on actual costs. | ‘Applicable’ means suitable/relevant to debtor’s actual financial situation and anticipated expenses. |
| Role of IRS Collection Financial Standards in interpreting the means test | Ransom: IRS guidelines should inform interpretation; not controlling but persuasive. | Court: can consult IRS standards but do not incorporate them; not controlling. | IRS guidelines may be consulted for interpretation but are not controlling. |
| Policy implications of restricting the Ownership Costs deduction | Ransom: denying deduction creates anomalies and inequities. | Court: deduction aligns with purpose to measure ability to repay; avoids non-existent expenses. | Restriction consistent with the means test purpose to reflect actual ability to pay. |
Key Cases Cited
- United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989) (statutory interpretation starting with text; contextual reading)
- Hamilton v. Lanning, 560 U.S. 505 (2010) (ordinary meaning; contextual framework for ‘applicable’)
- Leocal v. Ashcroft, 543 U.S. 1 (2004) (statutory interpretation principles)
- In re Ross-Tousey, 549 F.3d 1148 (CA7 2008) (meaning of ‘applicable’ in means test context (bankruptcy))
- In re Washburn, 579 F.3d 934 (CA8 2009) (ownership vs. operating costs; ownership deduction when no loan/lease)
- In re Tate, 571 F.3d 423 (CA5 2009) (recognition of ownership costs in similar posture)
- In re Canales, 377 B.R. 658 (Bkrtcy. Ct. CD Cal. 2007) (bankruptcy court addressing ownership deduction)
- In re Kimbro, 389 B.R. 518 (Bkrtcy. App. Panel CA6 2008) (discussion on interpretation of ownership costs)