Posted on 01/11/2011 11:44:42 AM PST by markomalley
The Supreme Court's newest justice, Elena Kagan, handed down her first opinion Tuesday, writing that a debtor cannot escape increased payments to his creditor under a complicated formula found in a 2005 bankruptcy law. Seven of the other eight justices agreed.
The case examined language in the Bankruptcy Abuse Prevention and Consumer Protection Act specifying the terms by which people in debt are to repay their obligations. The law allows for people to exclude or deduct $471 per month from their disposable income for car payments.
Jason Ransom filed for bankruptcy in 2006 after going more than $80,000 in debt. In following the law's means test for determining disposable income, and therefore how much he would have to pay his creditors, Ransom included the monthly $471 car deduction for a Toyota Camry he already owned.
The bankruptcy court hearing Ransom's case refused to go along with his payment plan, ruling that the deduction only applies to actual car payments.
That court ruled, and Kagan's decision Tuesday affirmed, that since Ransom owned his car outright he could not claim the ownership cost deduction. "Because Ransom owns his vehicle free and clear of any encumbrance, he incurs no expense in the 'Ownership Costs' category of the [law]," Kagan wrote.
Justice Antonin Scalia was the only justice in dissent arguing that a debtor ought to be able to factor in the ownership cost allowance when calculating monthly installment payments to his creditor.
The disagreement between Scalia and the rest of the court focused on the application of the word "applicable" in the language of the law.
(Excerpt) Read more at foxnews.com ...
It may be splitting hairs, and we all should read the full record of the decision; however:
I would think the ruling should have hinged on whether the law - with respect to the $471 dollar limitation - used the term car “payment” (Kagan and those that agreed with her would be right) or merely car “costs” (a broader term that could apply to ALL the “costs” of ownership), in which, I think, Scalia would be right.
Words to live by...
Unfortunately, I am still trying to determine exactly what the hell they mean... :-)
Justice Scalia is considered to be the most conservative of all the Justices, and his critics like to say he is meanspirited, but here he is, the only one of the nine, standing up for the little guy.
If the car is required to go to work, then what happens when it breaks down?
He has to go buy one- so the car COSTS are never over- You have maintenance and upkeep and ultimately require replacement.
I disagree with this decision because it could prevent the bankruptcy (which is a REMEDY) from being able to be carried out.
In determining his monthly expenses, he nonetheless claimed a car-ownership deduction of $471, the full amount specified in the “Ownership Costs” table, as well as a separate $388 deduction for car-operating costs.
So it looks like this guy was trying to claim a car payment of $477 and a car running/maintenance of $388. He didn't actually have a $471 payment, though, if I'm reading correctly.
I would think that the ownership costs should be allowed to be deducted only if the car is likely to need replacement.
Thomas is more conservative than Scalia.
In other words....Basically, everyone needs a car to do business and there is a continuing cost.
My payments are $200 for 5 years with $2000 down. (USED CAR). I had $600 worth of repairs last year. + gas + oil changes + inspection + registration renewal + license renewal + insurance reduction class + insurance. I have 2 more years of payments.
Regardless of how noble it may seem a Supreme Court Justice’s function is not in ruling for or against anyone or any entities favor, little or big.
A Supreme Court Justice has one single duty and obligation, to rule in favor of the Constitution.
It is the function of the Congress to provide legislation within their herein granted powers in favor of the little man if he needs favors.
Again, my point about the decision is concerned with how faithful the decision is TO THE LEGAL TERMS WRITTEN BY THE LAW.
My point, is not about, philosophically, what is, to my opinion or your opinion THE RIGHT THING TO DO.
SCOTUS judges are ONLY asked if the law was executed according to how it was SPECIFIED to be executed, and beyond that was there some constitutional mandate that would REQUIRE-BY THE CONSTITUTION that the law itself was in error. It is never supposed to be a matter of what a judge thinks would have simply been a “better” law, regardless of whether or not a Constitutional mandate for that “better” idea exists (restriction on government power or written Constitutional right of the individual).
So, the question regarding the SCOTUS decision must rest first and foremost ON THE LAW.
If THE LAW, regarding bankruptcy, referred to car “payments”, it would seem clear that the the law WAS NOT referring to ALL “costs of ownership”. If THE LAW referred, generically to car “costs”, it would seem clear that ANY costs of ownership could be considered.
If THE LAW referred to car “payments”, the majority is LEGALLY correct, most likely. If THE LAW referred to car “costs”, the Scalia’s lone dissent is PROBABLY the more constitutionally correct one.
What we need is THE LAW, not our mere opinion of what would be “best”.
Since writing my last post, I have read the SCOTUS decision.
The LAW refers to “ownership costs” (with respect to a vehicle), but then defines those cost limitations to a set of IRS standardized tables (which, by law, are adjusted periodically - accounting for higher limits over time).
Secondly, those tables, separate costs into two tables of “costs” - one that may be incurred by car payments, known in the tables as “ownership costs” and the other as “operating costs” for things like maintenance and insurance.
Thirdly, the law permits use of the first table ONLY if actual car payments are being made.
Lastly, in spite of THE LAW, the plaintiff included the maximum allowable “cost” from both tables, even though he was no longer making any car payments.
I think, that Scalia was wrong. The plaintiff was NOT deprived, by the law, from considering “ownership costs” unrelated to car payments, only from including a “cost” exclusion for the type of “ownership costs” HE WAS NOT incurring - car payments.
See the actual decision:
http://www.supremecourt.gov/opinions/10pdf/09-907.pdf
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