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One More Time on Ransom

posted by Bob Lawless

Yesterday, the Supreme Court decided Ransom v. FIA Card Services (née MBNA Bank). The issue was whether, to determine the amount of income available to pay creditors, a debtor could deduct hypothetical car payments on a car he already owned. That would seem to be result Congress directed in the 2005 bankruptcy amendments, but the Supreme Court disagreed. We already have blogged about the case a lot (here, here, here, and here).

The Court has spoken, and there is little point to repeating why I thought the case should come out differently. The Court's need to parse hopelessly muddled language is striking. Buce, writing at Underbelly, has written a fantastic post along this theme ("Justice Kagan's Torture Memo"). He makes an important point:

Rather, there seems to have developed a sense among the lower courts that what Congress intended to do was jam it to the debtor good and hard, and that if Congress get it right the first time, then we must help them. Bankruptcy lawyers have fashioned a new canon of statutory interpretation: if the statute seems to favor the creditor, apply the statute; if it seems to favor the debtor, assume it's a mistake and favor the creditor anyway.

Exactly. I agree with every single word Buce writes (with one exception), and I can't write as well as him. Go read the post.

The one tangential point where I disagree with Buce is that he should give Justice Thurgood Marshall more credit. Justice Marshall wrote some great bankruptcy opinions because his law practice often involved the problems of everyday persons, an experience that most every other Supreme Court justice lacks.


Could you double check your link? Doesn't seem to be working.

I fixed the link. Thanks, Jason.

Our "wise Latina" has again, unfortunately, hammered regular Americans. Milavetz indicates attorneys may not advise a debtor to incur new debt in order to game the Means Test, and Ransom now shuts the door on middle class debtors actually qualifying for Chapter 7 or having a decent chance of completing a Chapter 13 plan.

Heckuva job, Sotomayor.

Didn't Kegan deliver this one? Scalia and Sotomayor dissenting? Sotomayor in Milavetz did give us some direction on what was allowable, ie.. incurring debt in order support a dependent, spouse etc...

I agree with your conclusions that the middle class is being hammered by this stupid bankruptcy amendment. Makes it harder to recover.

There's a pretty egregious typo/malapropism/grammar mistake in the majority's opinion. The fact that it managed to slip past 9 sets of eyes plus their respective clerks is fairly embarrassing for the entire institutions.

The fact that Supreme Court can't even get its grammar right "lends itself" to criticism of the depressing state of affairs of the legal profession as a whole.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.