Ransom v. MBNA America Bank, N.A.
Issues
Whether an above-median debtor may claim a vehicle ownership cost deduction for vehicles the debtor owns outright.
This case reflects a lack of certainty in the bankruptcy code regarding the proper treatment of the vehicle ownership deduction when calculating an above-median Chapter 13 debtor’s disposable income. Courts are split on whether the deduction can be taken where the debtor owns a vehicle in full and is not responsible for monthly payments on the vehicle. Jason Ransom filed for bankruptcy under Chapter 13 and claimed a vehicle ownership deduction based on his ownership of an automobile that he owned free and clear. The Ninth Circuit found that the vehicle ownership deduction was not permitted if there was no existing obligation on the vehicle. Ransom argues that the court misinterpreted the statute and failed to recognize that a plain reading of the statute supports the deduction. The Supreme Court’s decision will clarify the availability of the vehicle ownership deduction to Chapter 13 debtors who own their vehicles outright.
Questions as Framed for the Court by the Parties
Whether, in calculating the debtor's "projected disposable income" during the plan period, the bankruptcy court may allow an ownership cost deduction for vehicles only if the debtor is actually making payments on the vehicles.
Jason Ransom ("Ransom") is a single man living in Nevada. See Ransom v. MBNA, 577 F.3d 1026, 1027 (9th Cir.
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Additional Resources
· Bankruptcy Case Blog, Tracy Keeton: A Fork in the Road: Courts Split on Transportation Ownership Deductions (Apr. 6, 2010)