The Supreme Court’s decision in the Ransom case, where the court said that only debtors who actually pay car loans can take a means test deduction for “vehicle ownership expenses,” at first looks like a loss for the consumer debtor, and it is.
But read on, and you may find that the Supreme Court has given a little back to debtors — thrown them a bone, if you will — in the same case.
The court’s opinion hints that in cases where a Chapter 13 debtor’s expenses change during the life of a plan, it is the responsibility of the trustee or creditors to bring a motion before the judge to alter the plan.
Take for example, a debtor who has a car payment at the beginning of the bankruptcy case, but who makes the last payment during the course of the plan. That debtor now has some money freed up, that could be added to the plan so creditors get more. But under the Ransom ruling, it is not the debtor’s duty to alert the court to this, but rather up to creditors and trustees to make the noise if they seek extra funds.
By Doug Beaton