U.S. Supreme Court Decision in Bankruptcy Case Affects Debtors Filing Chapter 13 in Atlanta, Georgia

Debtors who are considering filing Chapter 13 in Atlanta, Georgia will be affected by the U.S. Supreme Court’s recent decision in Ransom v. MBNA, a bankruptcy case about the means test. The Supreme Court found that the Chapter 13 debtor in this case could not take a vehicle ownership deduction on the bankruptcy “means test” that is required in order to determine the amount of disposable income that a debtor has available to repay debt. The debtor in this case owned his car outright and did not have car loan; thus, the Court found that there was no ownership expense and any excess income that would have gone towards a vehicle ownership expense had to be paid to creditors. On the other hand, if a debtor has a car loan, he or she is allowed to take the vehicle ownership deduction on the means test under the theory that such a car payment reduces the amount of disposable income available to repay creditors.

Prior to the Supreme Court’s decision, the circuit courts were divided on the issue; however, the 11th Circuit Court of Appeals, which is the circuit court for Georgia and for the Atlanta area had not ruled on the issue. The consequences of this decision for Atlanta, Georgia Chapter 13 lawyers and their clients is that potential filers have another factor to consider when determining how much a Chapter 13 debtor’s monthly payment should be.

Of course, some debtors still have the option of filing Chapter 7 or simply increasing their Chapter 13 payments. To find out whether Chapter 7 or Chapter 13 bankruptcy is the best type of bankruptcy for you to file based on the means test, consult the Law Offices of Charles Clapp at 404.585.0040.