In January 2011, the U.S. Supreme Court decided Ransom v. FIA Card Services, which originated here in San Francisco. Writing for an 8-1 majority in her first opinion for the Court, Justice Kagan treated the case as one of straightforward statutory construction, coming down on the same side as the trial judge (Dennis Montali, U.S. Bankruptcy Court, N.D. Ca.).

The decision's bottom line is that when a Chapter 13 debtor calculates the "Means Test" (which determines the minimum monthly amount that the debtor is supposedly able to repay to unsecured creditors), she cannot take a deduction for a vehicle "ownership expense" that she does not actually incur.

For example: If the debtor owns 1 vehicle free & clear, she may take an "operating expense" for that vehicle, but not an "ownership expense". But if she owns 2 cars, one free & clear, and the other encumbered by a loan, then she can take the operating expense for both and the ownership expense for one. In other words, she cannot take the ownership expense for cars she owns free & clear.

The decision is likely not to have much impact here in the Northern District of California, where Ransom has been prevailing law for some time.