Supreme court rules against deduction for car owners

The Supreme Court ruled against allowing individuals filing for Chapter 13 bankruptcy to receive a deduction on their cars if they already own the vehicle outright.  The court made their decision yesterday in a case involving a man named James Ransom.

Ransom argued that he should receive a $471 monthly exemption in his bankruptcy filing despite the fact that he was not making any lease or loan payments on his vehicle.  Justices involved in the case made their decision following the provision on disposable income that “the debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts”.  Although car ownership can be a deductible expense, because the monthly expense was no longer applicable to Ransom because he owned the vehicle outright, he is not eligible for the deduction.