09-907 Ransom v. FIA Card Services, N.A.

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Bankruptcy
Means test; car payments

A debtor who does not make loan or lease payments may not take the car-ownership deduction.

The vehicle-ownership category covers only the costs of a car loan or lease. The expense amount listed ($471) is the average monthly payment for loans and leases nationwide; it is not intended to estimate other conceivable expenses associated with maintaining a car. Maintenance expenses are the province of the separate “Operating Costs” deduction. A person who owns a car free and clear is entitled to the “Operating Costs” deduction for all driving-related expenses. But such a person may not claim the “Ownership Costs” deduction, because that allowance is for the separate costs of a car loan or lease. The IRS’ Collection Financial Standards reinforce this conclusion by making clear that individuals who have a car but make no loan or lease payments may take only the operating-costs deduction. Because Ransom owns his vehicle outright, he incurs no expense in the “Ownership Costs” category, and that expense amount is therefore not “applicable” to him.

577 F. 3d 1026, affirmed.

Local effect:    The opinion overrules the governing Seventh Circuit precedent to the contrary. In re Ross-Tousey, 549 F.3d 1148, 1162 (7th Cir. 2008).

09-907 Ransom v. FIA Card Services, N.A.

Kagan, J.; Scalia, J., dissenting.

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