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Ransom v. FIA Card Servs., N.A., No. 09-907

By FindLaw Staff on January 11, 2011 2:24 PM

Car-Ownership Deduction Disallowed

In Ransom v. FIA Card Servs., N.A., No. 09-907, a petition for Chapter 13 bankruptcy relief, the Supreme Court affirmed the Ninth Circuit's affirmance of the Bankruptcy Appellate Panel's order denying the confirmation of the debtor's proposed plan, where a debtor who does not make loan or lease payments may not take the car-ownership deduction.

As the court wrote:  "Chapter 13 of the Bankruptcy Code uses a statutory formula known as the "means test" to help ensure that debtors who can pay creditors do pay them. The means test instructs a debtor to determine his "disposable income"--the amount he has available to reimburse creditors--by deducting from his current monthly income "amounts reasonably necessary to be expended" for, inter alia, "maintenance or support." 11 U. S. C. §1325(b)(2)(A)(i)."

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