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Bankruptcy Experts Discuss Supreme Court’s Ruling in Ransom v. FIA Card Services and Its Effect on “Projected Disposable Income” for Chapter 13 Debtors
(January 13, 2011)

Issue:

The U.S. Supreme Court ruled (8-1) on Jan. 11, in the case of Ransom v. FIA Card Services affirming a lower court ruling that a debtor in bankruptcy who does not make loan or lease payments may not take the deduction that is otherwise available for ownership of a vehicle.

The speakers include:

  • Prof. Daniel Austin teaches bankruptcy and commercial law at Northeastern University School of Law. Author of ABI's Reaffirmation Agreements in Consumer Bankruptcy Cases, Prof. Austin’s research interests include pensions and retiree health care in business bankruptcy, constitutional and jurisdictional issues in bankruptcy law, and the metrics and impact of debt and personal bankruptcy.

  • Debra Miller serves as the chapter 13 trustee in the Northern District of Indiana. Miller is the incoming president of the National Association of Chapter 13 Trustees and has testified before Congress on consumer bankruptcy issues.

  • Nina M. Parker is the founder of the firm of Parker & Associates (Winchester, Mass.). Parker concentrates in the areas of consumer and corporate bankruptcies, specializing in small business and individual chapter 11 reorganizations and chapter 13 wage-earner plans.

  • Gilbert B. Weisman is a partner at Becket & Lee, LLP (Malvern, Pa.). Weisman specializes in non-dischargeability litigation and has focused his practice on litigation in chapter 13 cases related to determination of plan payment amount after the 2005 amendments to the Bankruptcy Code.

  • ABI Resident Scholar Prof. Jean Braucher of the University of Arizona James E. Rogers College of Law (Tucson, Ariz.) will serve as the moderator for the teleconference.

Background:

At issue in Ransom was whether a chapter 13 debtor can deduct from his projected disposable income a vehicle ownership cost when he owns his vehicle free and clear of liens and thus has no actual ownership expenses. The “means test,” created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, allows debtors to deduct from their “current monthly income” their “applicable monthly expense amounts specified under the [IRS] National Standards and Local Standards.” Among the Local Standards are vehicle ownership costs. The means test calculation applies in chapter 13 to above-median debtors, who, in determining their disposable income for the purpose of a chapter 13 plan, must calculate their reasonably necessary expenses in accordance with the means test.

In the first opinion authored by Justice Elena Kagan, the Supreme Court affirmed a lower court ruling that a debtor in bankruptcy who does not make loan or lease payments may not take the deduction that is otherwise available for ownership of a vehicle.

A panel of experts, including individuals who participated in the case, will discuss the effect of the Supreme Court’s ruling and to take questions from the media.

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For additional questions or requests regarding the teleconference or to speak with one of ABI’s expert resources, please contact ABI Public Affairs Manager John Hartgen at 703-894-5935 or jhartgen@abiworld.org.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency.  ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues.  The ABI membership includes more than 12,800 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals providing a forum for the exchange of ideas and information.  For additional information on ABI, visit ABI World at http://www.abiworld.org.  For additional conference information, visit http://www.abiworld.org/events/newevents.html.