Ransom v. FIA Card Services, N. A.

(Slip Opinion) OCTOBER TERM, 2010 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

RANSOM v. FIA CARD SERVICES, N. A., FKA MBNA

AMERICA BANK, N. A.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

No. 09–907. Argued October 4, 2010—Decided January 11, 2011

Chapter 13 of the Bankruptcy Code uses a statutory formula known as

the “means test” to help ensure that debtors who can pay creditors do

pay them. The means test instructs a debtor to determine his “dis

posable income”—the amount he has available to reimburse credi

tors—by deducting from his current monthly income “amounts rea

sonably necessary to be expended” for, inter alia, “maintenance or

support.” 11 U. S. C. §1325(b)(2)(A)(i). For a debtor whose income is

above the median for his State, the means test indentifies which ex

penses qualify as “amounts reasonably necessary to be expended.” As

relevant here, the statute provides that “[t]he debtor’s monthly ex

penses shall be the debtor’s applicable monthly expense amounts

specified under the National Standards and Local Standards, and the

debtor’s actual monthly expenses for the categories specified as Other

Necessary Expenses issued by the Internal Revenue Service [IRS] for

the area in which the debtor resides.” §707(b)(2)(A)(ii)(I).

The Standards are tables listing standardized expense amounts for

basic necessities, which the IRS prepares to help calculate taxpayers’

ability to pay overdue taxes. The IRS also creates supplemental

guidelines known as the “Collection Financial Standards,” which de

scribe how to use the tables and what the amounts listed in them

mean. The Local Standards include an allowance for transportation

expenses, divided into vehicle “Ownership Costs” and vehicle “Oper

ating Costs.” The Collection Financial Standards explain that “Own

ership Costs” cover monthly loan or lease payments on an automo

bile; the expense amounts listed are based on nationwide car

financing data. The Collection Financial Standards further state

that a taxpayer who has no car payment may not claim an allowance

2 RANSOM v. FIA CARD SERVICES, N. A.

Syllabus

for ownership costs.

When petitioner Ransom filed for Chapter 13 bankruptcy relief, he

listed respondent (FIA) as an unsecured creditor. Among his assets,

Ransom reported a car that he owns free of any debt. In determining

his monthly expenses, he nonetheless claimed a car-ownership deduc

tion of $471, the full amount specified in the “Ownership Costs” table,

as well as a separate $388 deduction for car-operating costs. Based

on his means-test calculations, Ransom proposed a bankruptcy plan

that would result in repayment of approximately 25% of his unse

cured debt. FIA objected on the ground that the plan did not direct

all of Ransom’s disposable income to unsecured creditors. FIA con

tended that Ransom should not have claimed the car-ownership al

lowance because he does not make loan or lease payments on his car.

Agreeing, the Bankruptcy Court denied confirmation of the plan.

The Ninth Circuit Bankruptcy Appellate Panel and the Ninth Circuit

affirmed.

Held: A debtor who does not make loan or lease payments may not take

the car-ownership deduction. Pp. 6–18.

(a) This Court’s interpretation begins with the language of the

Bankruptcy Code, which provides that a debtor may claim only “ap

plicable” expense amounts listed in the Standards. Because the Code

does not define the key word “applicable,” the term carries its ordi

nary meaning of appropriate, relevant, suitable, or fit. What makes

an expense amount “applicable” in this sense is most naturally un

derstood to be its correspondence to an individual debtor’s financial

circumstances. Congress established a filter, permitting a debtor to

claim a deduction from a National or Local Standard table only if

that deduction is appropriate for him. And a deduction is so appro

priate only if the debtor will incur the kind of expense covered by the

table during the life of the plan. Had Congress not wanted to sepa

rate debtors who qualify for an allowance from those who do not, it

could have omitted the term “applicable” altogether. Without that

word, all debtors would be eligible to claim a deduction for each cate

gory listed in the Standards. Interpreting the statute to require a

threshold eligibility determination thus ensures that “applicable”

carries meaning, as each word in a statute should.

This reading draws support from the statute’s context and purpose.

The Code initially defines a debtor’s disposable income as his “cur

rent monthly income . . . less amounts reasonably necessary to be ex

pended.” §1325(b)(2). It then instructs that such reasonably neces

sary amounts “shall be determined in accordance with” the means

test. §1325(b)(3). Because Congress intended the means test to ap

proximate the debtor’s reasonable expenditures on essential items, a

debtor should be required to qualify for a deduction by actually incur

Cite as: 562 U. S. ____ (2011) 3

Syllabus

ring an expense in the relevant category. Further, the statute’s pur

pose—to ensure that debtors pay creditors the maximum they can af

ford—is best achieved by interpreting the means test, consistent with

the statutory text, to reflect a debtor’s ability to afford repayment.

Pp. 6–9.

(b) The vehicle-ownership category covers only the costs of a car

loan or lease. The expense amount listed ($471) is the average

monthly payment for loans and leases nationwide; it is not intended

to estimate other conceivable expenses associated with maintaining a

car. Maintenance expenses are the province of the separate “Operat

ing Costs” deduction. A person who owns a car free and clear is enti

tled to the “Operating Costs” deduction for all driving-related ex

penses. But such a person may not claim the “Ownership Costs”

deduction, because that allowance is for the separate costs of a car

loan or lease. The IRS’ Collection Financial Standards reinforce this

conclusion by making clear that individuals who have a car but make

no loan or lease payments may take only the operating-costs deduc

tion. Because Ransom owns his vehicle outright, he incurs no ex

pense in the “Ownership Costs” category, and that expense amount is

therefore not “applicable” to him. Pp. 9–11.

(c) Ransom’s arguments to the contrary—an alternative interpreta

tion of the key word “applicable,” an objection to the Court’s view of

the scope of the “Ownership Costs” category, and a criticism of the

policy implications of the Court’s approach—are unpersuasive.

Pp. 11–18.

577 F. 3d 1026, affirmed.

KAGAN, J., delivered the opinion of the Court, in which ROBERTS,

C. J., and KENNEDY, THOMAS, GINSBURG, BREYER, ALITO, and SO-

TOMAYOR, JJ., joined. SCALIA, J., filed a dissenting opinion.

Cite as: 562 U. S. ____ (2011) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 09–907

_________________

JASON M. RANSOM, PETITIONER v. FIA CARD

SERVICES, N. A., FKA MBNA AMERICA

BANK, N. A.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[January 11, 2011]

JUSTICE KAGAN delivered the opinion of the Court.

Chapter 13 of the Bankruptcy Code enables an individ

ual to obtain a discharge of his debts if he pays his credi

tors a portion of his monthly income in accordance with a

court-approved plan. 11 U. S. C. §1301 et seq. To deter

mine how much income the debtor is capable of paying,

Chapter 13 uses a statutory formula known as the “means

test.” §§707(b)(2) (2006 ed. and Supp. III), 1325(b)(3)(A)

(2006 ed.). The means test instructs a debtor to deduct

specified expenses from his current monthly income. The

result is his “disposable income”—the amount he has

available to reimburse creditors. §1325(b)(2).

This case concerns the specified expense for vehicle

ownership costs. We must determine whether a debtor

like petitioner Jason Ransom who owns his car outright,

and so does not make loan or lease payments, may claim

an allowance for car-ownership costs (thereby reducing the

amount he will repay creditors). We hold that the text,

context, and purpose of the statutory provision at issue

preclude this result. A debtor who does not make loan or

2 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

lease payments may not take the car-ownership deduction.

I

A

“Congress enacted the Bankruptcy Abuse Prevention

and Consumer Protection Act of 2005 (BAPCPA or Act) to

correct perceived abuses of the bankruptcy system.” Mi

lavetz, Gallop & Milavetz, P. A. v. United States, 559 U. S.

___, ___ (2010) (slip op., at 1). In particular, Congress

adopted the means test—“[t]he heart of [BAPCPA’s] con

sumer bankruptcy reforms,” H. R. Rep. No. 109–31, pt. 1,

p. 2 (2005) (hereinafter H. R. Rep.), and the home of the

statutory language at issue here—to help ensure that

debtors who can pay creditors do pay them. See, e.g., ibid.

(under BAPCPA, “debtors [will] repay creditors the maxi

mum they can afford”).

In Chapter 13 proceedings, the means test provides a

formula to calculate a debtor’s disposable income, which

the debtor must devote to reimbursing creditors under a

court-approved plan generally lasting from three to five

years. §§1325(b)(1)(B) and (b)(4).1 The statute defines

“disposable income” as “current monthly income” less

“amounts reasonably necessary to be expended” for “main

tenance or support,” business expenditures, and certain

charitable contributions. §§1325(b)(2)(A)(i) and (ii). For a

debtor whose income is above the median for his State, the

means test identifies which expenses qualify as “amounts

——————

1 Chapter 13 borrows the means test from Chapter 7, where it is used

as a screening mechanism to determine whether a Chapter 7 proceed

ing is appropriate. Individuals who file for bankruptcy relief under

Chapter 7 liquidate their nonexempt assets, rather than dedicate their

future income, to repay creditors. See 11 U. S. C. §§704(a)(1), 726. If

the debtor’s Chapter 7 petition discloses that his disposable income as

calculated by the means test exceeds a certain threshold, the petition is

presumptively abusive. §707(b)(2)(A)(i). If the debtor cannot rebut the

presumption, the court may dismiss the case or, with the debtor’s

consent, convert it into a Chapter 13 proceeding. §707(b)(1).

Cite as: 562 U. S. ____ (2011) 3

Opinion of the Court

reasonably necessary to be expended.” The test supplants

the pre-BAPCPA practice of calculating debtors’ reason

able expenses on a case-by-case basis, which led to varying

and often inconsistent determinations. See, e.g., In re

Slusher, 359 B. R. 290, 294 (Bkrtcy. Ct. Nev. 2007).

Under the means test, a debtor calculating his “rea

sonably necessary” expenses is directed to claim allow

ances for defined living expenses, as well as for secured

and priority debt. §§707(b)(2)(A)(ii)–(iv). As relevant

here, the statute provides:

“The debtor’s monthly expenses shall be the debtor’s

applicable monthly expense amounts specified under

the National Standards and Local Standards, and the

debtor’s actual monthly expenses for the categories

specified as Other Necessary Expenses issued by the

Internal Revenue Service [IRS] for the area in which

the debtor resides.” §707(b)(2)(A)(ii)(I).

These are the principal amounts that the debtor can claim

as his reasonable living expenses and thereby shield from

creditors.

The National and Local Standards referenced in this

provision are tables that the IRS prepares listing stan

dardized expense amounts for basic necessities.2 The IRS

uses the Standards to help calculate taxpayers’ ability to

pay overdue taxes. See 26 U. S. C. §7122(d)(2). The IRS

also prepares supplemental guidelines known as the Col

lection Financial Standards, which describe how to use the

——————

2 The National Standards designate allowances for six categories of

expenses: (1) food; (2) housekeeping supplies; (3) apparel and services;

(4) personal care products and services; (5) out-of-pocket health care

costs; and (6) miscellaneous expenses. Internal Revenue Manual

§5.15.1.8 (Oct. 2, 2009), http://www.irs.gov/irm/part5/irm_05-015

001.html#d0e1012 (all Internet materials as visited Jan. 7, 2011, and

available in Clerk of Court’s case file). The Local Standards authorize

deductions for two kinds of expenses: (1) housing and utilities; and (2)

transportation. Id., §5.15.1.9.

4 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

tables and what the amounts listed in them mean.

The Local Standards include an allowance for transpor

tation expenses, divided into vehicle “Ownership Costs”

and vehicle “Operating Costs.”3 At the time Ransom filed

for bankruptcy, the “Ownership Costs” table appeared as

follows:

Ownership Costs

First Car Second Car

National $471 $332

App. to Brief for Respondent 5a. The Collection Financial

Standards explain that these ownership costs represent

“nationwide figures for monthly loan or lease payments,”

id., at 2a; the numerical amounts listed are “base[d] . . . on

the five-year average of new and used car financing data

compiled by the Federal Reserve Board,” id., at 3a. The

Collection Financial Standards further instruct that, in

the tax-collection context, “[i]f a taxpayer has no car pay

ment, . . . only the operating costs portion of the transpor

tation standard is used to come up with the allowable

transportation expense.” Ibid.

B

Ransom filed for Chapter 13 bankruptcy relief in July

2006. App. 1, 54. Among his liabilities, Ransom itemized

over $82,500 in unsecured debt, including a claim held by

respondent FIA Card Services, N. A. (FIA). Id., at 41.

Among his assets, Ransom listed a 2004 Toyota Camry,

valued at $14,000, which he owns free of any debt. Id., at

38, 49, 52.

For purposes of the means test, Ransom reported in

——————

3 Although

both components of the transportation allowance are listed

in the Local Standards, only the operating-cost expense amounts vary

by geography; in contrast, the IRS provides a nationwide figure for

ownership costs.

Cite as: 562 U. S. ____ (2011) 5

Opinion of the Court

come of $4,248.56 per month. Id., at 46. He also listed

monthly expenses totaling $4,038.01. Id., at 53. In de

termining those expenses, Ransom claimed a car

ownership deduction of $471 for the Camry, the full

amount specified in the IRS’s “Ownership Costs” table.

Id., at 49. Ransom listed a separate deduction of $338 for

car-operating costs. Ibid. Based on these figures, Ransom

had disposable income of $210.55 per month. Id., at 53.

Ransom proposed a 5-year plan that would result in

repayment of approximately 25% of his unsecured debt.

Id., at 55. FIA objected to confirmation of the plan on the

ground that it did not direct all of Ransom’s disposable

income to unsecured creditors. Id., at 64. In particular,

FIA argued that Ransom should not have claimed the car

ownership allowance because he does not make loan or

lease payments on his car. Id., at 67. FIA noted that

without this allowance, Ransom’s disposable income would

be $681.55—the $210.55 he reported plus the $471 he

deducted for vehicle ownership. Id., at 71. The difference

over the 60 months of the plan amounts to about $28,000.

C

The Bankruptcy Court denied confirmation of Ransom’s

plan. App. to Pet. for Cert. 48. The court held that Ran

som could deduct a vehicle-ownership expense only “if he

is currently making loan or lease payments on that vehi

cle.” Id., at 41.

Ransom appealed to the Ninth Circuit Bankruptcy

Appellate Panel, which affirmed. In re Ransom, 380 B. R.

799, 808–809 (2007). The panel reasoned that an “expense

[amount] becomes relevant to the debtor (i.e., appropriate

or applicable to the debtor) when he or she in fact has such

an expense.” Id., at 807. “[W]hat is important,” the panel

noted, “is the payments that debtors actually make, not

how many cars they own, because [those] payments . . .

are what actually affect their ability to” reimburse unse

6 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

cured creditors. Ibid.

The United States Court of Appeals for the Ninth Cir

cuit affirmed. In re Ransom, 577 F. 3d 1026, 1027 (2009).

The plain language of the statute, the court held, “does not

allow a debtor to deduct an ‘ownership cost’ . . . that the

debtor does not have.” Id., at 1030. The court observed

that “[a]n ‘ownership cost’ is not an ‘expense’—either

actual or applicable—if it does not exist, period.” Ibid.

We granted a writ of certiorari to resolve a split of au

thority over whether a debtor who does not make loan or

lease payments on his car may claim the deduction for

vehicle-ownership costs. 559 U. S. ___ (2010).4 We now

affirm the Ninth Circuit’s judgment.

II

Our interpretation of the Bankruptcy Code starts

“where all such inquiries must begin: with the language of

the statute itself.” United States v. Ron Pair Enterprises,

Inc., 489 U. S. 235, 241 (1989). As noted, the provision of

the Code central to the decision of this case states:

“The debtor’s monthly expenses shall be the debtor’s

applicable monthly expense amounts specified under

the National Standards and Local Standards, and the

debtor’s actual monthly expenses for the categories

specified as Other Necessary Expenses issued by the

[IRS] for the area in which the debtor resides.”

§707(b)(2)(A)(ii)(I).

The key word in this provision is “applicable”: A debtor

may claim not all, but only “applicable” expense amounts

——————

4 Compare In re Ransom, 577 F. 3d 1026, 1027 (CA9 2009) (case be

low), with In re Washburn, 579 F. 3d 934, 935 (CA8 2009) (permitting

the allowance), In re Tate, 571 F. 3d 423, 424 (CA5 2009) (same), and

In re Ross-Tousey, 549 F. 3d 1148, 1162 (CA7 2008) (same). The ques

tion has also divided bankruptcy courts. See, e.g., In re Canales, 377

B. R. 658, 662 (Bkrtcy. Ct. CD Cal. 2007) (citing dozens of cases reach

ing opposing results).

Cite as: 562 U. S. ____ (2011) 7

Opinion of the Court

listed in the Standards. Whether Ransom may claim the

$471 car-ownership deduction accordingly turns on

whether that expense amount is “applicable” to him.

Because the Code does not define “applicable,” we look

to the ordinary meaning of the term. See, e.g., Hamilton

v. Lanning, 560 U. S. ___, ___ (2010) (slip op., at 6). “Ap

plicable” means “capable of being applied: having rele

vance” or “fit, suitable, or right to be applied: appropriate.”

Webster’s Third New International Dictionary 105 (2002).

See also New Oxford American Dictionary 74 (2d ed. 2005)

(“relevant or appropriate”); 1 Oxford English Dictionary

575 (2d ed. 1989) (“[c]apable of being applied” or “[f]it or

suitable for its purpose, appropriate”). So an expense

amount is “applicable” within the plain meaning of the

statute when it is appropriate, relevant, suitable, or fit.

What makes an expense amount “applicable” in this

sense (appropriate, relevant, suitable, or fit) is most natu

rally understood to be its correspondence to an individual

debtor’s financial circumstances. Rather than authorizing

all debtors to take deductions in all listed categories,

Congress established a filter: A debtor may claim a deduc

tion from a National or Local Standard table (like “[Car]

Ownership Costs”) if but only if that deduction is appro

priate for him. And a deduction is so appropriate only if

the debtor has costs corresponding to the category covered

by the table—that is, only if the debtor will incur that kind

of expense during the life of the plan. The statute under

scores the necessity of making such an individualized

determination by referring to “the debtor’s applicable

monthly expense amounts,” §707(b)(2)(A)(ii)(I) (emphasis

added)—in other words, the expense amounts applicable

(appropriate, etc.) to each particular debtor. Identifying

these amounts requires looking at the financial situation

of the debtor and asking whether a National or Local

Standard table is relevant to him.

If Congress had not wanted to separate in this way

8 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

debtors who qualify for an allowance from those who do

not, it could have omitted the term “applicable” altogether.

Without that word, all debtors would be eligible to claim a

deduction for each category listed in the Standards. Con

gress presumably included “applicable” to achieve a differ

ent result. See Leocal v. Ashcroft, 543 U. S. 1, 12 (2004)

(“[W]e must give effect to every word of a statute wherever

possible”). Interpreting the statute to require a threshold

determination of eligibility ensures that the term “appli

cable” carries meaning, as each word in a statute should.

This reading of “applicable” also draws support from the

statutory context. The Code initially defines a debtor’s

disposable income as his “current monthly income . . . less

amounts reasonably necessary to be expended.” §1325(b)(2)

(emphasis added). The statute then instructs that

“[a]mounts reasonably necessary to be expended . . . shall

be determined in accordance with” the means test.

§1325(b)(3). Because Congress intended the means test to

approximate the debtor’s reasonable expenditures on

essential items, a debtor should be required to qualify for

a deduction by actually incurring an expense in the rele

vant category. If a debtor will not have a particular kind

of expense during his plan, an allowance to cover that cost

is not “reasonably necessary” within the meaning of the

statute.5

Finally, consideration of BAPCPA’s purpose strengthens

our reading of the term “applicable.” Congress designed

——————

5 This interpretation also avoids the anomalous result of granting

preferential treatment to individuals with above-median income.

Because the means test does not apply to Chapter 13 debtors whose

incomes are below the median, those debtors must prove on a case-by

case basis that each claimed expense is reasonably necessary. See

§§1325(b)(2) and (3). If a below-median-income debtor cannot take a

deduction for a nonexistent expense, we doubt Congress meant to

provide such an allowance to an above-median-income debtor—the very

kind of debtor whose perceived abuse of the bankruptcy system in

spired Congress to enact the means test.

Cite as: 562 U. S. ____ (2011) 9

Opinion of the Court

the means test to measure debtors’ disposable income and,

in that way, “to ensure that [they] repay creditors the

maximum they can afford.” H. R. Rep., at 2. This purpose

is best achieved by interpreting the means test, consistent

with the statutory text, to reflect a debtor’s ability to

afford repayment. Cf. Hamilton, 560 U. S., at ___ (slip op.,

at 14) (rejecting an interpretation of the Bankruptcy Code

that “would produce [the] senseless resul[t]” of “deny[ing]

creditors payments that the debtor could easily make”).

Requiring a debtor to incur the kind of expenses for which

he claims a means-test deduction thus advances

BAPCPA’s objectives.

Because we conclude that a person cannot claim an

allowance for vehicle-ownership costs unless he has some

expense falling within that category, the question in this

case becomes: What expenses does the vehicle-ownership

category cover? If it covers loan and lease payments alone,

Ransom does not qualify, because he has no such expense.

Only if that category also covers other costs associ

ated with having a car would Ransom be entitled to this

deduction.

The less inclusive understanding is the right one: The

ownership category encompasses the costs of a car loan or

lease and nothing more. As noted earlier, the numerical

amounts listed in the “Ownership Costs” table are “base[d]

. . . on the five-year average of new and used car financing

data compiled by the Federal Reserve Board.” App. to

Brief for Respondent 3a. In other words, the sum $471 is

the average monthly payment for loans and leases na

tionwide; it is not intended to estimate other conceivable

expenses associated with maintaining a car. The Stan

dards do account for those additional expenses, but in a

different way: They are mainly the province of the sepa

rate deduction for vehicle “Operating Costs,” which in

clude payments for “[v]ehicle insurance, . . . maintenance,

fuel, state and local registration, required inspection,

10 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

parking fees, tolls, [and] driver’s license.” Internal Rev-

enue Manual §§5.15.1.7 and 5.15.1.8 (May 1, 2004),

reprinted in App. to Brief for Respondent 16a, 20a; see

also IRS, Collection Financial Standards (Feb. 19, 2010),

http://www.irs.gov/individuals/article/0,,id=96543,00.html.6

A person who owns a car free and clear is entitled to claim

the “Operating Costs” deduction for all these expenses of

driving—and Ransom in fact did so, to the tune of $338.

But such a person is not entitled to claim the “Ownership

Costs” deduction, because that allowance is for the sepa

rate costs of a car loan or lease.

The Collection Financial Standards—the IRS’s explana

tory guidelines to the National and Local Standards—

explicitly recognize this distinction between ownership

and operating costs, making clear that individuals who

have a car but make no loan or lease payments may claim

only the operating allowance. App. to Brief for Respon

dent 3a; see supra, at 4. Although the statute does not

incorporate the IRS’s guidelines, courts may consult this

material in interpreting the National and Local Stan

dards; after all, the IRS uses those tables for a similar

purpose—to determine how much money a delinquent

taxpayer can afford to pay the Government. The guide

lines of course cannot control if they are at odds with the

statutory language. But here, the Collection Financial

Standards’ treatment of the car-ownership deduction

reinforces our conclusion that, under the statute, a debtor

seeking to claim this deduction must make some loan or

lease payments.7

——————

6 In addition, the IRS has categorized taxes, including those associ

ated with car ownership, as an “Other Necessary Expens[e],” for which

a debtor may take a deduction. See App. to Brief for Respondent 26a;

Brief for United States as Amicus Curiae 16, n. 4.

7 Because the dissent appears to misunderstand our use of the Collec

tion Financial Standards, and because it may be important for future

cases to be clear on this point, we emphasize again that the statute

Cite as: 562 U. S. ____ (2011) 11

Opinion of the Court

Because Ransom owns his vehicle free and clear of any

encumbrance, he incurs no expense in the “Ownership

Costs” category of the Local Standards. Accordingly, the

car-ownership expense amount is not “applicable” to him,

and the Ninth Circuit correctly denied that deduction.

III

Ransom’s argument to the contrary relies on a different

interpretation of the key word “applicable,” an objection to

our view of the scope of the “Ownership Costs” category,

and a criticism of the policy implications of our approach.

We do not think these claims persuasive.

A

Ransom first offers another understanding of the term

“applicable.” A debtor, he says, determines his “applica

ble” deductions by locating the box in each National or

Local Standard table that corresponds to his geographic

location, income, family size, or number of cars. Under

this approach, a debtor “consult[s] the table[s] alone” to

determine his appropriate expense amounts. Reply Brief

for Petitioner 16. Because he has one car, Ransom argues

that his “applicable” allowance is the sum listed in the

first column of the “Ownership Costs” table ($471); if he

had a second vehicle, the amount in the second column

($332) would also be “applicable.” On this approach, the

word “applicable” serves a function wholly internal to the

tables; rather than filtering out debtors for whom a deduc

tion is not at all suitable, the term merely directs each

——————

does not “incorporat[e]” or otherwise “impor[t]” the IRS’s guidance.

Post, at 1, 4 (opinion of SCALIA, J.). The dissent questions what possible

basis except incorporation could justify our consulting the IRS’s view,

post, at 4, n., but we think that basis obvious: The IRS creates the

National and Local Standards referenced in the statute, revises them

as it deems necessary, and uses them every day. The agency might,

therefore, have something insightful and persuasive (albeit not control

ling) to say about them.

12 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

debtor to the correct box (and associated dollar amount of

deduction) within every table.

This alternative reading of “applicable” fails to comport

with the statute’s text, context, or purpose. As intimated

earlier, supra, at 7–8, Ransom’s interpretation would

render the term “applicable” superfluous. Assume Con

gress had omitted that word and simply authorized a

deduction of “the debtor’s monthly expense amounts”

specified in the Standards. That language, most naturally

read, would direct each debtor to locate the box in every

table corresponding to his location, income, family size, or

number of cars and to deduct the amount stated. In other

words, the language would instruct the debtor to use the

exact approach Ransom urges. The word “applicable” is

not necessary to accomplish that result; it is necessary

only for the different purpose of dividing debtors eligible to

make use of the tables from those who are not. Further,

Ransom’s reading of “applicable” would sever the connec

tion between the means test and the statutory provision it

is meant to implement—the authorization of an allowance

for (but only for) “reasonably necessary” expenses. Ex

penses that are wholly fictional are not easily thought of

as reasonably necessary. And finally, Ransom’s interpre

tation would run counter to the statute’s overall purpose of

ensuring that debtors repay creditors to the extent they

can—here, by shielding some $28,000 that he does not in

fact need for loan or lease payments.

As against all this, Ransom argues that his reading

is necessary to account for the means test’s distinction

between “applicable” and “actual” expenses—more fully

stated, between the phrase “applicable monthly expense

amounts” specified in the Standards and the phrase “ac

tual monthly expenses for . . . Other Necessary Expenses.”

§707(b)(2)(A)(ii)(I) (emphasis added). The latter phrase

enables a debtor to deduct his actual expenses in particu

lar categories that the IRS designates relating mainly to

Cite as: 562 U. S. ____ (2011) 13

Opinion of the Court

taxpayers’ health and welfare. Internal Revenue Manual

§5.15.1.10(1), http://www.irs.gov/irm/part5/ irm_05-015

001.html#d0e1381. According to Ransom, “applicable”

cannot mean the same thing as “actual.” Brief for Peti

tioner 40. He thus concludes that “an ‘applicable’ expense

can be claimed [under the means test] even if no ‘actual’

expense was incurred.” Ibid.

Our interpretation of the statute, however, equally

avoids conflating “applicable” with “actual” costs. Al

though the expense amounts in the Standards apply only

if the debtor incurs the relevant expense, the debtor’s out

of-pocket cost may well not control the amount of the

deduction. If a debtor’s actual expenses exceed the

amounts listed in the tables, for example, the debtor may

claim an allowance only for the specified sum, rather than

for his real expenditures.8 For the Other Necessary Ex

pense categories, by contrast, the debtor may deduct his

actual expenses, no matter how high they are.9 Our read

——————

8 The parties and the Solicitor General as amicus curiae dispute the

proper deduction for a debtor who has expenses that are lower than the

amounts listed in the Local Standards. Ransom argues that a debtor

may claim the specified expense amount in full regardless of his out-of

pocket costs. Brief for Petitioner 24–27. The Government concurs with

this view, provided (as we require) that a debtor has some expense

relating to the deduction. See Brief for United States as Amicus Curiae

19–21. FIA, relying on the IRS’s practice, contends to the contrary that

a debtor may claim only his actual expenditures in this circumstance.

Brief for Respondent 12, 45–46 (arguing that the Local Standards

function as caps). We decline to resolve this issue. Because Ransom

incurs no ownership expense at all, the car-ownership allowance is not

applicable to him in the first instance. Ransom is therefore not entitled

to a deduction under either approach.

9 For the same reason, the allowance for “applicable monthly expense

amounts” at issue here differs from the additional allowances that the

dissent cites for the deduction of actual expenditures. See post, at 3–4

(noting allowances for “actual expenses” for care of an elderly or chroni

cally ill household member, §707(b)(2)(A)(ii)(II), and for home energy

costs, §707(b)(2)(A)(ii)(V)).

14 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

ing of the means test thus gives full effect to “the distinc

tion between ‘applicable’ and ‘actual’ without taking a

further step to conclude that ‘applicable’ means ‘nonexis

tent.’ ” In re Ross-Tousey, 368 B. R. 762, 765 (Bkrtcy. Ct.

ED Wis. 2007), rev’d, 549 F. 3d 1148 (CA7 2008).

Finally, Ransom’s reading of “applicable” may not even

answer the essential question: whether a debtor may

claim a deduction. “[C]onsult[ing] the table[s] alone” to

determine a debtor’s deduction, as Ransom urges us to do,

Reply Brief for Petitioner 16, often will not be sufficient

because the tables are not self-defining. This case pro

vides a prime example. The “Ownership Costs” table

features two columns labeled “First Car” and “Second

Car.” See supra, at 4. Standing alone, the table does not

specify whether it refers to the first and second cars owned

(as Ransom avers), or the first and second cars for which

the debtor incurs ownership costs (as FIA maintains)—and

so the table does not resolve the issue in dispute.10 See

In re Kimbro, 389 B. R. 518, 533 (Bkrtcy. App. Panel CA6

2008) (Fulton, J., dissenting) (“[O]ne cannot really ‘just

——————

10 The interpretive problem is not, as the dissent suggests, “whether

to claim a deduction for one car or for two,” post, at 3, but rather

whether to claim a deduction for any car that is owned if the debtor has

no ownership costs. Indeed, if we had to decide this question on the

basis of the table alone, we might well decide that a debtor who does

not make loan or lease payments cannot claim an allowance. The table,

after all, is titled “Ownership Costs”—suggesting that it applies to

those debtors who incur such costs. And as noted earlier, the dollar

amounts in the table represent average automobile loan and lease

payments nationwide (with all other car-related expenses approxi

mated in the separate “Operating Costs” table). See supra, at 9–10.

Ransom himself concedes that not every debtor falls within the terms of

this table; he would exclude, and thus prohibit from taking a deduction,

a person who does not own a car. Brief for Petitioner 33. In like

manner, the four corners of the table appear to exclude an additional

group—debtors like Ransom who own their cars free and clear and so

do not make the loan or lease payments that constitute “Ownership

Costs.”

Cite as: 562 U. S. ____ (2011) 15

Opinion of the Court

look up’ dollar amounts in the tables without either refer

ring to IRS guidelines for using the tables or imposing pre

existing assumptions about how [they] are to be navi

gated” (footnote omitted)). Some amount of interpretation

is necessary to decide what the deduction is for and

whether it is applicable to Ransom; and so we are brought

back full circle to our prior analysis.

B

Ransom next argues that viewing the car-ownership

deduction as covering no more than loan and lease pay

ments is inconsistent with a separate sentence of the

means test that provides: “Notwithstanding any other

provision of this clause, the monthly expenses of the

debtor shall not include any payments for debts.”

§707(b)(2)(A)(ii)(I). The car-ownership deduction cannot

comprise only loan and lease payments, Ransom contends,

because those payments are always debts. See Brief for

Petitioner 28, 44–45.

Ransom ignores that the “notwithstanding” sentence

governs the full panoply of deductions under the National

and Local Standards and the Other Necessary Expense

categories. We hesitate to rely on that general provision

to interpret the content of the car-ownership deduction

because Congress did not draft the former with the latter

specially in mind; any friction between the two likely

reflects only a lack of attention to how an across-the-board

exclusion of debt payments would correspond to a particu

lar IRS allowance.11 Further, the “notwithstanding” sen

tence by its terms functions only to exclude, and not to

authorize, deductions. It cannot establish an allowance

——————

11 Because Ransom does not make payments on his car, we need not

and do not resolve how the “notwithstanding” sentence affects the

vehicle-ownership deduction when a debtor has a loan or lease expense.

See Brief for United States as Amicus Curiae 23, n. 5 (offering alterna

tive views on this question); Tr. of Oral Arg. 51–52.

16 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

for non-loan or -lease ownership costs that no National or

Local Standard covers. Accordingly, the “notwithstand

ing” sentence does nothing to alter our conclusion that the

“Ownership Costs” table does not apply to a debtor whose

car is not encumbered.

C

Ransom finally contends that his view of the means test

is necessary to avoid senseless results not intended by

Congress. At the outset, we note that the policy concerns

Ransom emphasizes pale beside one his reading creates:

His interpretation, as we have explained, would frustrate

BAPCPA’s core purpose of ensuring that debtors devote

their full disposable income to repaying creditors. See

supra, at 8–9. We nonetheless address each of Ransom’s

policy arguments in turn.

Ransom first points out a troubling anomaly: Under our

interpretation, “[d]ebtors can time their bankruptcy filing

to take place while they still have a few car payments left,

thus retaining an ownership deduction which they would

lose if they filed just after making their last payment.”

Brief for Petitioner 54. Indeed, a debtor with only a single

car payment remaining, Ransom notes, is eligible to claim

a monthly ownership deduction. Id., at 15, 52.

But this kind of oddity is the inevitable result of a stan

dardized formula like the means test, even more under

Ransom’s reading than under ours. Such formulas are by

their nature over- and under-inclusive. In eliminating the

pre-BAPCPA case-by-case adjudication of above-median

income debtors’ expenses, on the ground that it leant itself

to abuse, Congress chose to tolerate the occasional peculi

arity that a brighter-line test produces. And Ransom’s

alternative reading of the statute would spawn its own

anomalies—even placing to one side the fundamental

strangeness of giving a debtor an allowance for loan or

lease payments when he has not a penny of loan or lease

Cite as: 562 U. S. ____ (2011) 17

Opinion of the Court

costs. On Ransom’s view, for example, a debtor entering

bankruptcy might purchase for a song a junkyard car—“an

old, rusted pile of scrap metal [that would] si[t] on cinder

blocks in his backyard,” In re Brown, 376 B. R. 601, 607

(Bkrtcy. Ct. SD Tex. 2007)—in order to deduct the $471

car-ownership expense and reduce his payment to credi

tors by that amount. We do not see why Congress would

have preferred that result to the one that worries Ransom.

That is especially so because creditors may well be able to

remedy Ransom’s “one payment left” problem. If car

payments cease during the life of the plan, just as if other

financial circumstances change, an unsecured creditor

may move to modify the plan to increase the amount the

debtor must repay. See 11 U. S. C. §1329(a)(1).

Ransom next contends that denying the ownership

allowance to debtors in his position “sends entirely the

wrong message, namely, that it is advantageous to be

deeply in debt on motor vehicle loans, rather than to pay

them off.” Brief for Petitioner 55. But the choice here is

not between thrifty savers and profligate borrowers, as

Ransom would have it. Money 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, and Congress did not express a preference for one

use of these funds over the other. Further, Ransom’s

argument mistakes what the deductions in the means test

are meant to accomplish. Rather than effecting any broad

federal policy as to saving or borrowing, the deductions

serve merely to ensure that debtors in bankruptcy can

afford essential items. The car-ownership allowance thus

safeguards a debtor’s ability to retain a car throughout the

plan period. If the debtor already owns a car outright, he

has no need for this protection.

Ransom finally argues that a debtor who owns his car

free and clear may need to replace it during the life of the

plan; “[g]ranting the ownership cost deduction to a vehicle

18 RANSOM v. FIA CARD SERVICES, N. A.

Opinion of the Court

that is owned outright,” he states, “accords best with

economic reality.” Id., at 52. In essence, Ransom seeks an

emergency cushion for car owners. But nothing in the

statute authorizes such a cushion, which all debtors pre

sumably would like in the event some unexpected need

arises. And a person who enters bankruptcy without any

car at all may also have to buy one during the plan period;

yet Ransom concedes that a person in this position cannot

claim the ownership deduction. Tr. of Oral Arg. 20. The

appropriate way to account for unanticipated expenses

like a new vehicle purchase is not to distort the scope of a

deduction, but to use the method that the Code provides

for all Chapter 13 debtors (and their creditors): modifica

tion of the plan in light of changed circumstances. See

§1329(a)(1); see also supra, at 17.

IV

Based on BAPCPA’s text, context, and purpose, we hold

that the Local Standard expense amount for transporta

tion “Ownership Costs” is not “applicable” to a debtor who

will not incur any such costs during his bankruptcy plan.

Because the “Ownership Costs” category covers only loan

and lease payments and because Ransom owns his car free

from any debt or obligation, he may not claim the allow

ance. In short, Ransom may not deduct loan or lease

expenses when he does not have any. We therefore affirm

the judgment of the Ninth Circuit.

It is so ordered.

Cite as: 562 U. S. ____ (2011) 1

SCALIA, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 09–907

_________________

JASON M. RANSOM, PETITIONER v. FIA CARD

SERVICES, N. A., FKA MBNA AMERICA

BANK, N. A.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[January 11, 2011]

JUSTICE SCALIA, dissenting.

I would reverse the judgment of the Ninth Circuit. I

agree with the conclusion of the three other Courts of

Appeals to address the question: that a debtor who owns a

car free and clear is entitled to the car-ownership allow

ance. See In re Washburn, 579 F. 3d 934 (CA8 2009); In re

Tate, 571 F. 3d 423 (CA5 2009); In re Ross-Tousey, 549 F.

3d 1148 (CA7 2008).

The statutory text at issue is the phrase enacted in the

Bankruptcy Abuse Prevention and Consumer Protection

Act of 2005 (BAPCPA), “applicable monthly expense

amounts specified under the National Standards and

Local Standards,” 11 U. S. C. §707(b)(2)(A)(ii)(I). The

Court holds that the word “applicable” in this provision

imports into the Local Standards a directive in the Inter

nal Revenue Service’s Collection Financial Standards,

which have as their stated purpose “to help determine a

taxpayer’s ability to pay a delinquent tax liability,” App. to

Brief for Respondent 1a. That directive says that “[i]f a

taxpayer has no car payment,” the Ownership Cost provi

sions of the Local Standards will not apply. Id., at 3a.

That directive forms no part of the Local Standards to

which the statute refers; and the fact that portions of the

Local Standards are to be disregarded for revenue

2 RANSOM v. FIA CARD SERVICES, N. A.

SCALIA, J., dissenting

collection purposes says nothing about whether they are to

be disregarded for purposes of Chapter 13 of the Bank

ruptcy Code. The Court believes, however, that unless the

IRS’s Collection Financial Standards are imported into the

Local Standards, the word “applicable” would do no work,

violating the principle that “ ‘we must give effect to every

word of a statute wherever possible.’ ” Ante, at 8 (quoting

Leocal v. Ashcroft, 543 U. S. 1, 12 (2004)). I disagree. The

canon against superfluity is not a canon against verbosity.

When a thought could have been expressed more con

cisely, one does not always have to cast about for some

additional meaning to the word or phrase that could have

been dispensed with. This has always been understood. A

House of Lords opinion holds, for example, that in the

phrase “ ‘in addition to and not in derogation of ’ ” the last

part adds nothing but emphasis. Davies v. Powell Duffryn

Associated Collieries, Ltd., [1942] A. C. 601, 607.

It seems to me that is the situation here. To be sure,

one can say “according to the attached table”; but it is

acceptable (and indeed I think more common) to say “ac

cording to the applicable provisions of the attached table.”

That seems to me the fairest reading of “applicable

monthly expense amounts specified under the National

Standards and Local Standards.” That is especially so for

the Ownership Costs portion of the Local Standards,

which had no column titled “No Car.” Here the expense

amount would be that shown for one car (which is all the

debtor here owned) rather than that shown for two cars;

and it would be no expense amount if the debtor owned no

car, since there is no “applicable” provision for that on the

table. For operating and public transportation costs, the

“applicable” amount would similarly be the amount pro

vided by the Local Standards for the geographic region in

which the debtor resides. (The debtor would not first be

required to prove that he actually operates the cars that

he owns, or, if does not own a car, that he actually uses

Cite as: 562 U. S. ____ (2011) 3

SCALIA, J., dissenting

public transportation.) The Court claims that the tables

“are not self-defining,” and that “[s]ome amount of inter

pretation” is necessary in choosing whether to claim a

deduction at all, for one car, or for two. Ante, at 14–15.

But this problem seems to me more metaphysical than

practical. The point of the statutory language is to entitle

debtors who own cars to an ownership deduction, and I

have little doubt that debtors will be able to choose cor

rectly whether to claim a deduction for one car or for two.

If the meaning attributed to the word by the Court were

intended, it would have been most precise to say “monthly

expense amounts specified under the National Standards

and Local Standards, if applicable for IRS collection pur

poses.” And even if utter precision was too much to ex

pect, it would at least have been more natural to say

“monthly expense amounts specified under the National

Standards and Local Standards, if applicable.” That

would make it clear that amounts specified under those

Standards may nonetheless not be applicable, justifying

(perhaps) resort to some source other than the Standards

themselves to give meaning to the condition. The very

next paragraph of the Bankruptcy Code uses that formu

lation (“if applicable”) to limit to actual expenses the

deduction for care of an elderly or chronically ill household

member: “[T]he debtor’s monthly expenses may include, if

applicable, the continuation of actual expenses paid by the

debtor that are reasonable and necessary” for that pur

pose. 11 U. S. C. §707(b)(2)(A)(ii)(II) (emphasis added).

Elsewhere as well, the Code makes it very clear when

prescribed deductions are limited to actual expenditures.

Section 707(b)(2)(A)(ii)(I) itself authorizes deductions for a

host of expenses—health and disability insurance, for

example—only to the extent that they are “actual . . .

expenses” that are “reasonably necessary.” Additional

deductions for energy are allowed, but again only if they

are “actual expenses” that are “reasonable and necessary.”

4 RANSOM v. FIA CARD SERVICES, N. A.

SCALIA, J., dissenting

§707(b)(2)(A)(ii)(V). Given the clarity of those limitations

to actual outlays, it seems strange for Congress to limit

the car-ownership deduction to the somewhat peculiar

category “cars subject to any amount whatever of out

standing indebtedness” by the mere word “applicable,”

meant as incorporation of a limitation that appears in

instructions to IRS agents.*

I do not find the normal meaning of the text undermined

by the fact that it produces a situation in which a

debtor who owes no payments on his car nonetheless gets

the operating-expense allowance. For the Court’s more

strained interpretation still produces a situation in which

a debtor who owes only a single remaining payment on his

car gets the full allowance. As for the Court’s imagined

horrible in which “a debtor entering bankruptcy might

purchase for a song a junkyard car,” ante, at 17: That is

fairly matched by the imagined horrible that, under the

Court’s scheme, a debtor entering bankruptcy might pur

chase a junkyard car for a song plus a $10 promissory note

payable over several years. He would get the full owner

ship expense deduction.

Thus, the Court’s interpretation does not, as promised,

——————

* The Court protests that I misunderstand its use of the Collection

Financial Standards. Its opinion does not, it says, find them to be

incorporated by the Bankruptcy Code; they simply “reinforc[e] our

conclusion that . . . a debtor seeking to claim this deduction must make

some loan or lease payments.” Ante, at 10. True enough, the opinion

says that the Bankruptcy Code “does not incorporate the IRS’s guide

lines,” but it immediately continues that “courts may consult this

material in interpreting the National and Local Standards” so long as it

is not “at odds with the statutory language.” Ibid. In the present

context, the real-world difference between finding the guidelines

incorporated and finding it appropriate to consult them escapes me,

since I can imagine no basis for consulting them unless Congress meant

them to be consulted, which would mean they are incorporated. And

without incorporation, they are at odds with the statutory language,

which otherwise contains no hint that eligibility for a Car Ownership

deduction requires anything other than ownership of a car.

Cite as: 562 U. S. ____ (2011) 5

SCALIA, J., dissenting

maintain “the connection between the means test and the

statutory provision it is meant to implement—the authori

zation of an allowance for (but only for) ‘reasonably neces

sary’ expenses,” ante, at 12. Nor do I think this difficulty

is eliminated by the deus ex machina of 11 U. S. C.

§1329(a)(1), which according to the Court would allow an

unsecured creditor to “move to modify the plan to increase

the amount the debtor must repay,” ante, at 17. Apart

from the fact that, as a practical matter, the sums in

volved would hardly make this worth the legal costs,

allowing such ongoing revisions of matters specifically

covered by the rigid means test would return us to “the

pre-BAPCPA case-by-case adjudication of above-median

income debtors’ expenses,” ante, at 16. If the BAPCPA

had thought such adjustments necessary, surely it would

have taken the much simpler and more logical step of

providing going in that the ownership expense allowance

would apply only so long as monthly payments were due.

The reality is, to describe it in the Court’s own terms,

that occasional overallowance (or, for that matter, under

allowance) “is the inevitable result of a standardized

formula like the means test . . . . Congress chose to toler

ate the occasional peculiarity that a brighter-line test

produces.” Ibid. Our job, it seems to me, is not to elimi

nate or reduce those “oddit[ies],” ibid., but to give the

formula Congress adopted its fairest meaning. In my

judgment the “applicable monthly expense amounts” for

operating costs “specified under the . . . Local Standards,”

are the amounts specified in those Standards for either

one car or two cars, whichever of those is applicable.