Supreme Court Denies Bankruptcy Deduction To Car Owners
In Justice Elena Kagan’s first opinion for the court, the Supreme Court today ruled that debtors in bankruptcy who own their cars outright may not exempt “ownership costs” when calculating their disposable income. Chapter 13 bankruptcy laws allow debtors with car loan or lease payments to subtract a standard amount from their disposable income, meaning that amount is not available for repaying creditors.
James Ransom had argued that he was entitled to a $471-per-month exemption, just like someone who had a loan or lease, even though he owned his Toyota Camry outright. The deduction is separate from a $388 amount for operating costs.
The Supreme Court’s analysis focused on the statute’s provision that “the debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts” specified in various tables. Ransom had argued that the tables had a line item for car ownership, and therefore that amount was “applicable” to him, but the Supreme Court said that, in this context, “applicable” meant only costs that the debtor actually incurred.
Ransom had argued that it did not make sense for Congress to provide preferential treatment for people who took on debt to buy cars, but Justice Kagan responded that “[m]oney is fungible: The $14,000 that Ransom spent to purchase his Camry outright was money he did not devote to paying down his credit card debt.”
Only Justice Antonin Scalia dissented, arguing that the statutory text is not as clear as the majority made it out to be and that “applicable” in this case does not limit deductions to actual expenses.
The case was Ransom v. FIA.
Elena Kagan, bankruptcy in Supreme Court
OPINION: Kagan To Bring A 'Center' Court
Elena Kagan was sworn in, and now we have a court that is a bit more to the center.
Kagan is no Justice John Paul Stevens, although my hope is that she will grow into a more liberal justice.
The hearings were as expected, and so was the vote with the more centrist Republicans voting with the Democrats. It went as planned: no huge paper trail, although some on the Right tried to make hay out of some abortion memos she wrote while in the White House counsel’s office.
As Washington D.C. correspondent Victoria Jones said, there was no “Macaca” moment to the Elena Kagan hearings. (Macaca refers to a racial slur by George Allen in his 2006 Senate campaign). What we heard at the hearings was someone who has a very detailed knowledge of the law and who was well prepared from her weeks of practice “murder boards” that took place to prepare her for the grilling.
The hearings and the objections from some of the Republicans were Washington doing what Washington does best: political theater.
During the hearings, Sen. Patrick Leahy, an amateur photographer, was taking pictures. The professional photographers where taking pictures of him.
Kagan was able to breeze past her undergraduate thesis in which she said that justices wield great power for social and economic change when asked by Sen. Amy Klobuchar, D-Minn. Clearly, Kagan knew it was coming and was able to toss the ball out of the park with ease.
She deftly handled the gay marriage issue by saying that is was probably going to come before the court. When Sen. Arlen Specter – with nothing to lose since he already lost – asked her to talk about a current case, she responded that it was something under her as solicitor general. Specter said she was going to be a justice, she responded that she doesn’t count her chickens.
Without a “Macaca” moment, pretty much every senator went into this knowing exactly how they were going to vote. The nominees are now carefully coached on how not to answer questions. It is exasperating to sit and listen to it.
When Sen. Herbert Kohl, D-Wis., asked her about who she admired on the court and got a non-answer, he shook his head and said “Oh my oh, my oh.” A conservative constitutional lawyer said to me that the carping about her was a way of raising money from the base for the 2012 elections while at the same time most of the GOP senators were pretty happy that even though she self-described her political viewpoints as “progressive,” her actual actions and memos were not.
The handouts that were given to the press by each side reflected the complete political nature of this constitutionally mandated “advise and consent” role. There were letters from law school deans praising her for the compromise reached on campus military recruiters.
The Republicans, knowing that the base hates gays in the military, came back with their own set of papers that they hoped would show how anti-military she is. They expected to stir up the base and get more money.
It didn’t work.
The only reason to have these hearings is to make sure that the nominee is not a complete idiot or lunatic and won’t lose their cool. It also is the only chance that the public has to see and feel what a future justice is like. Other than that, it is scripted and a waste of time. The votes were set, and the only role of any future justice is make sure they don’t say anything that is going to nix the nomination.
This charade of hearings will most likely happen again quite soon. Justice Ginsburg had a second cancer operation in 2009, and three other justices are in their ’70s. It will happen again exactly the same way. A president will appoint someone who is political and doesn’t have too long of a paper trail. The candidate will not say anything controversial.
What a waste of time and energy. Too bad we can’t do better. The only thing better staged is a real-estate open house.