Justice Kagan's Debut Opinion

Supreme Court Justice Elena Kagan announced the first opinion of her tenure this morning, which turned out to decide the first case she heard argued in the current term last October 4.

As often happens for new justices, Kagan was assigned to write her first decision in a less-than-blockbuster case, Ransom v. FIA Card Services, a bankruptcy dispute over which routine expenses debtors can deduct from their monthly income and thereby keep out of the hands of creditors. Kagan managed to make it interesting nonetheless, with the non-technical, very accessible summary she read from the bench for spectators.

Kagan ruled against the debtor, and in favor of the credit card company. She was joined by all her colleagues except for dissenting Justice Antonin Scalia, thus depriving her of the unanimity that the Court tries to achieve for a justice's opinion-writing debut. 

We'll have more on Kagan's first decision and other Court happenings later today in Supreme Court Insider, our digital newsletter on the Court.

Comments

[Craig D. Robins, Esq.]

Although the decision does not help consumer bankruptcy debtors, there have been ways that they have been able to side-step this means test rule.

Debtors who do not have a financed vehicle can trade in their old car for a newer one that is financed, just before filing, and then get the "automobile ownership expense" means test deduction.

However, they would have to do so in good faith because they need a newer, more reliable vehicle. The good faith component of this "pre-bankruptcy planning" is necessary in order to avoid any allegation that they were gaming the bankruptcy laws and filing a bankruptcy case in an abusive manner.

Also, many jurisdictions permit debtors to take an additional means test deduction for an older car (one that is at least six years old) even if their car is not financed. This deduction, typically $200, is in line with IRS procedure, upon which much of the means test calculations are based.

[Patrick Hart]

As a bankruptcy lawyer I would disagree that this is not a blockbuster decision.

The court's interpretation is going to make it impossible for many people including a number, who have been caught up in the current mortgage crisis, from obtaining much needed relief in bankrupty.