Ransom v. FIA Card Services, N. A.

OCTOBER TERM, 2010

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 “dispos able income”—the amount he has available to reimburse creditors—by deducting from his current monthly income “amounts reasonably neces sary 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 me

dian for his State, the means test indentiﬁes which expenses qualify as “amounts reasonably necessary to be expended.” As relevant here, the statute provides that “[t]he debtor’s monthly expenses shall be the debt or’s applicable monthly expense amounts speciﬁed under the National Standards and Local Standards, and the debtor’s actual monthly ex penses 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 guide lines known as the “Collection Financial Standards,” which describe how to use the tables and what the amounts listed in them mean. The Local Standards include an allowance for transportation expenses, di vided into vehicle “Ownership Costs” and vehicle “Operating Costs.” The Collection Financial Standards explain that “Ownership Costs” cover monthly loan or lease payments on an automobile; the expense amounts listed are based on nationwide car-ﬁnancing data. The Collec tion Financial Standards further state that a taxpayer who has no car payment may not claim an allowance 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 deduction of $471, the full amount speciﬁed in the “Ownership Costs” table, as well as a separate $338 deduction for car-operating costs. Based on his

Syllabus

means-test calculations, Ransom proposed a bankruptcy plan that would result in repayment of approximately 25% of his unsecured debt. FIA objected on the ground that the plan did not direct all of Ransom’s dis posable income to unsecured creditors. FIA contended that Ransom should not have claimed the car-ownership allowance 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. 69–80.

(a) This Court’s interpretation begins with the language of the Bank ruptcy Code, which provides that a debtor may claim only “applicable” expense amounts listed in the Standards. Because the Code does not deﬁne the key word “applicable,” the term carries its ordinary meaning of appropriate, relevant, suitable, or ﬁt. What makes an expense amount “applicable” in this sense is most naturally understood to be its correspondence to an individual debtor’s ﬁnancial circumstances. Con gress 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 appropriate 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 separate debtors who qualify for an allow ance 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. 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 “current monthly income . . . less amounts reasonably necessary to be expended.” § 1325(b)(2). It then instructs that such reasonably necessary amounts “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. Further, the statute’s purpose—to ensure that debtors pay creditors the maximum they can afford—is best achieved by inter preting the means test, consistent with the statutory text, to reﬂect a debtor’s ability to afford repayment. Pp. 69–71.

(b) The vehicle-ownership category covers only the costs of a car loan or lease. The expense amount listed ($471) is the average monthly pay

Cite as: 562 U. S. 61 (2011)

Syllabus

ment 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 “Operating Costs” deduction. A person who owns a car free and clear is entitled to the “Operating Costs” deduction for all driving-related expenses. 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’s Collection Financial Standards reinforce this conclusion by making clear that indi viduals who have a car but make no loan or lease payments may take only the operating-costs deduction. Because Ransom owns his vehicle outright, he incurs no expense in the “Ownership Costs” category, and that expense amount is therefore not “applicable” to him. Pp. 71–73. (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. 73–80.

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 Sotomayor, JJ., joined. Scalia, J., ﬁled a dissenting opinion, post, p. 80.

Christopher P. Burke argued the cause for petitioner.

With him on the briefs was Daniel Lucid.

Deanne E. Maynard argued the cause for respondent.

With her on the brief were Seth M. Galanter, Marc A. Hear ron, Mark P. Ladner, Larren M. Nashelsky, Gilbert B. Weis man, John D. Sheehan, and William Andrew McNeal.

Nicole A. Saharsky argued the cause for the United States as amicus curiae in support of respondent. With her on the brief were Acting Solicitor General Katyal, Acting Assist ant Attorney General Hertz, Deputy Solicitor General Stew art, William Kanter, Jeffrica Jenkins Lee, Ramona D. El liott, and P. Matthew Sutko.*

*A brief of amicus curiae urging reversal was ﬁled for the National Association of Consumer Bankruptcy Attorneys by Jonathan S. Massey and Tara Twomey.

A brief of amicus curiae urging afﬁrmance was ﬁled for G. Eric Brun

stad, Jr., by Mr. Brunstad, pro se, and Collin O’Connor Udell.

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

Opinion of the Court Justice Kagan delivered the opinion of the Court.

Chapter 13 of the Bankruptcy Code enables an individual to obtain a discharge of his debts if he pays his creditors a portion of his monthly income in accordance with a court- approved plan. 11 U. S. C. § 1301 et seq. To determine 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 “dispos able 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 allow ance 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 re sult. A debtor who does not make loan or 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 cor rect perceived abuses of the bankruptcy system.” Milavetz,

v. United States, 559 U. S. 229,

Gallop & Milavetz, P. A.

231–232 (2010). In particular, Congress adopted the means test—“[t]he heart of [BAPCPA’s] consumer bankruptcy re forms,” 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 maximum they can afford”).

Cite as: 562 U. S. 61 (2011)

Opinion of the Court

In Chapter 13 proceedings, the means test provides a for mula 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 reason ably necessary to be expended” for “maintenance or sup port,” business expenditures, and certain charitable contri butions. §§ 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 reasonably necessary to be expended.” The test supplants the pre- BAPCPA practice of calculating debtors’ reasonable ex penses 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 “reasonably necessary” expenses is directed to claim allowances for de ﬁned living expenses, as well as for secured and priority debt. §§ 707(b)(2)(A)(ii)–(iv). As relevant here, the stat

ute 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 debt or’s actual monthly expenses for the categories speciﬁed as Other Necessary Expenses issued by the Internal

1 Chapter 13 borrows the means test from Chapter 7, where it is used as a screening mechanism to determine whether a Chapter 7 proceeding is appropriate. Individuals who ﬁle for bankruptcy relief under Chapter 7 liquidate their nonexempt assets, rather than dedicate their future in come, 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).

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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 pro vision are tables that the IRS prepares listing standardized 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 Collection Financial Standards, which describe how to use the 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 $471 Second Car $332 National

App. to Brief for Respondent 5a. The Collection Financial Standards explain that these ownership costs represent “na

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.

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 owner ship costs.

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tionwide 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 com piled by the Federal Reserve Board,” id., at 3a. The Collec tion Financial Standards further instruct that, in the tax- collection context, “[i]f a taxpayer has no car payment, . . . only the operating costs portion of the transportation stand ard 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 respond ent 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 income of $4,248.56 per month. Id., at 46. He also listed monthly expenses totaling $4,038.01. Id., at 53. In determining 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 sepa rate 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 repay ment 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 in come 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.

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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 vehicle.” Id., at 41.

Ransom appealed to the Ninth Circuit Bankruptcy Appel late 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 unsecured credi tors. Ibid.

The United States Court of Appeals for the Ninth Circuit 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 applica ble—if it does not exist, period.” Ibid.

We granted a writ of certiorari to resolve a split of author ity 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. 1066 (2010).4 We now afﬁrm the Ninth Circuit’s judgment.

4 Compare In re Ransom, 577 F. 3d 1026, 1027 (CA9 2009) (case below), with In re Washburn, 579 F. 3d 934, 935 (CA8 2009) (permitting the allow ance); 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 question 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 reaching opposing results).

Cite as: 562 U. S. 61 (2011)

Opinion of the Court

II

Our interpretation of the Bankruptcy Code starts “where all such inquiries must begin: with the language of the stat ute 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 catego ries 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 listed in the Standards. Whether Ransom may claim the $471 car- ownership deduction accordingly turns on whether that ex pense 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. 505, 513 (2010). “Applicable” means “ca pable of being applied: having relevance” or “ﬁt, suitable, or right to be applied: appropriate.” Webster’s Third New In ternational Dictionary 105 (2002). See also New Oxford American Dictionary 74 (2d ed. 2005) (“relevant or appro priate”); 1 Oxford English Dictionary 575 (2d ed. 1989) (“[c]a pable 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, rele vant, suitable, or ﬁt.

What makes an expense amount “applicable” in this sense (appropriate, relevant, suitable, or ﬁt) is most naturally un derstood to be its correspondence to an individual debtor’s ﬁnancial circumstances. Rather than authorizing all debt ors to take deductions in all listed categories, Congress es

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tablished a ﬁlter: A debtor may claim a deduction from a National or Local Standard table (like “[Car] Ownership Costs”) if, but only if, that deduction is appropriate 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 underscores 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 partic ular 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 debt ors who qualify for an allowance from those who do not, it could have omitted the term “applicable” altogether. With out that word, all debtors would be eligible to claim a deduc tion for each category listed in the Standards. Congress presumably included “applicable” to achieve a different re sult. See Leocal v. Ashcroft, 543 U. S. 1, 12 (2004) (“[W]e must give effect to every word of a statute wherever possi ble”). Interpreting the statute to require a threshold deter mination of eligibility ensures that the term “applicable” 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 essen tial items, a debtor should be required to qualify for a deduc tion by actually incurring an expense in the relevant cate gory. If a debtor will not have a particular kind of expense

Cite as: 562 U. S. 61 (2011)

Opinion of the Court

during his plan, an allowance to cover that cost is not “rea sonably necessary” within the meaning of the statute.5

Finally, consideration of BAPCPA’s purpose strengthens our reading of the term “applicable.” Congress designed the means test to measure debtors’ disposable income and, in that way, “to ensure that [they] repay creditors the maxi mum 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 re payment. Cf. Hamilton, 560 U. S., at 520 (rejecting an in terpretation 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 deduc tion thus advances BAPCPA’s objectives.

Because we conclude that a person cannot claim an allow ance for vehicle-ownership costs unless he has some expense falling within that category, the question in this case be comes: 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 associated with having a car would Ransom be entitled to this deduction.

The less inclusive understanding is the right one: The own ership 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 com piled by the Federal Reserve Board.” App. to Brief for Re

5 This interpretation also avoids the anomalous result of granting prefer ential 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 inspired Congress to enact the means test.

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spondent 3a. In other words, the sum $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. The Standards do account for those additional expenses, but in a different way: They are mainly the province of the separate deduction for vehicle “Operating Costs,” which include payments for “[v]ehicle insurance, . . . maintenance, fuel, state and local registration, required in spection, parking fees, tolls, [and] driver’s license.” Inter nal Revenue Manual §§ 5.15.1.7 and 5.15.1.9 (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 per son who owns a car free and clear is entitled to claim the “Operating Costs” deduction for all these expenses of driv ing—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 separate costs of a car loan or lease.

The Collection Financial Standards—the IRS’s explana tory guidelines to the National and Local Standards—explic itly recognize this distinction between ownership and operat ing 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 Respondent 3a; see supra, at 66–67. Although the statute does not incorporate the IRS’s guidelines, courts may consult this material in interpreting the National and Local Standards; after all, the IRS uses those tables for a similar purpose—to determine how much money a delinquent taxpayer can afford to pay the Govern ment. The guidelines of course cannot control if they are at odds with the statutory language. But here, the Collection

6 In addition, the IRS has categorized taxes, including those associated 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.

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Opinion of the Court

Financial Standards’ treatment of the car-ownership deduc tion reinforces our conclusion that, under the statute, a debtor seeking to claim this deduction must make some loan or lease payments.7

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 “ap plicable.” A debtor, he says, determines his “applicable” de ductions by locating the box in each National or Local Stand ard 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 appro priate 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 “Owner

7 Because the dissent appears to misunderstand our use of the Collection Financial Standards, and because it may be important for future cases to be clear on this point, we emphasize again that the statute does not “incorporat[e]” or otherwise “impor[t]” the IRS’s guidance. Post, at 81, 83 (opinion of Scalia, J.). The dissent questions what possible basis except incorporation could justify our consulting the IRS’s view, post, at 83, 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 controlling) to say about them.

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ship Costs” table ($471); if he had a second vehicle, the amount in the second column ($332) would also be “applica ble.” On this approach, the word “applicable” serves a func tion wholly internal to the tables; rather than ﬁltering out debtors for whom a deduction is not at all suitable, the term merely directs each 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 70, Ransom’s interpretation would render the term “applicable” superﬂuous. Assume Congress had omitted that word and simply authorized a deduction of “the debtor’s monthly expense amounts” speciﬁed in the Stand ards. 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 in struct 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 divid ing debtors eligible to make use of the tables from those who are not. Further, Ransom’s reading of “applicable” would sever the connection between the means test and the statu tory provision it is meant to implement—the authorization of an allowance for (but only for) “reasonably necessary” ex penses. Expenses that are wholly ﬁctional are not easily thought of as reasonably necessary. And ﬁnally, Ransom’s interpretation would run counter to the statute’s overall pur pose 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

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Opinion of the Court .

amounts” speciﬁed in the Standards and the phrase “actual Other Necessary Expenses.” monthly expenses for . § 707(b)(2)(A)(ii)(I) (emphasis added). The latter phrase en ables a debtor to deduct his actual expenses in particu lar categories that the IRS designates relating mainly to 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 Petitioner 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. Although 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 debt or’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 Expense categories, by contrast, the debtor may deduct his actual expenses, no matter how high

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.

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they are.9 Our reading of the means test thus gives full ef fect to “the distinction between ‘applicable’ and ‘actual’ with out taking a further step to conclude that ‘applicable’ means ‘nonexistent.’ ” 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 an swer 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 provides a prime ex ample. The “Ownership Costs” table features two columns labeled “First Car” and “Second Car.” See supra, at 66.

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

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 82 (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)).

10 The interpretive problem is not, as the dissent suggests, “whether to claim a deduction for one car or for two,” post, at 82, 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 repre sent average automobile loan and lease payments nationwide (with all other car-related expenses approximated in the separate “Operating Costs” table). See supra, at 71–72. 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 ap

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(Bkrtcy. App. Panel CA6 2008) (Fulton, J., dissenting) (“[O]ne cannot really ‘just look up’ dollar amounts in the tables with out either referring to IRS guidelines for using the tables or imposing pre-existing assumptions about how [they] are to be navigated” (footnote omitted)). Some amount of inter pretation 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 de duction as covering no more than loan and lease payments 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 al ways debts. See Brief for Petitioner 28, 44–45.

Ransom ignores that the “notwithstanding” sentence gov erns the full panoply of deductions under the National and Local Standards and the Other Necessary Expense catego ries. We hesitate to rely on that general provision to inter pret 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 particular IRS allowance.11

pear 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.”

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

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Further, the “notwithstanding” sentence by its terms func tions only to exclude, and not to authorize, deductions. It cannot establish an allowance for nonloan or nonlease owner ship costs that no National or Local Standard covers. Ac cordingly, the “notwithstanding” 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 Con gress. 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 71. We nonetheless address each of Ransom’s pol icy 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 pay ment 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 stand ardized formula like the means test, even more under Ran som’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 peculiarity 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

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not a penny of loan or lease 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 pay ment to creditors by that amount. We do not see why Con gress would have preferred that result to the one that wor ries Ransom. That is especially so because creditors may well be able to remedy Ransom’s “one payment left” prob lem. If car payments cease during the life of the plan, just as if other ﬁnancial circumstances change, an unsecured cred itor 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 allow ance 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 pur chase his Camry outright was money he did not devote to paying down his credit card debt, and Congress did not ex press 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 ef fecting any broad federal policy as to saving or borrowing, the deductions serve merely to ensure that debtors in bank ruptcy can afford essential items. The car-ownership allow ance 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 that is owned outright,” he states, “accords best with economic reality.” Id., at 52. In essence, Ransom seeks an emer

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gency cushion for car owners. But nothing in the statute authorizes such a cushion, which all debtors presumably 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 own ership 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): modiﬁcation of the plan in light of changed circumstances. See § 1329(a)(1); see also supra, at 79.

IV

Based on BAPCPA’s text, context, and purpose, we hold that the Local Standard expense amount for transportation “Ownership Costs” is not “applicable” to a debtor who will not incur any such costs during his bankruptcy plan. Be cause 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 allowance. 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.

Justice Scalia, dissenting. I would reverse the judgment of the Ninth Circuit. I agree with the conclusion of the three other Courts of Ap peals to address the question: that a debtor who owns a car free and clear is entitled to the car-ownership allowance.

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

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of 2005 (BAPCPA), “applicable monthly expense amounts speciﬁed under the National Standards and Local Stand ards,” 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 Internal Revenue Service’s Col lection Financial Standards, which have as their stated pur pose “to help determine a taxpayer’s ability to pay a delin quent tax liability,” App. to Brief for Respondent 1a. That directive says that “[i]f a taxpayer has no car payment,” the ownership cost provisions 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-collection purposes says nothing about whether they are to be disre garded for purposes of Chapter 13 of the Bankruptcy Code.

The Court believes, however, that unless the IRS’s Collec tion Financial Standards are imported into the Local Stand ards, the word “applicable” would do no work, violating the principle that “ ‘[w]e must give effect to every word of a statute wherever possible.’ ” Ante, at 70 (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 concisely, one does not always have to cast about for some additional mean ing 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 “according to the applicable provisions of the attached table.” That seems to me the fairest reading of “applicable monthly expense

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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 simi larly be the amount provided 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 he does not own a car, that he actually uses public transportation.) The Court claims that the tables “are not self-deﬁning,” and that “[s]ome amount of interpretation” is necessary in choosing whether to claim a deduction at all, for one car, or for two. Ante, at 76, 77.

But this problem seems to me more metaphysical than prac tical. The point of the statutory language is to entitle debt ors who own cars to an ownership deduction, and I have little doubt that debtors will be able to choose correctly 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 purposes.” And even if utter precision was too much to expect, 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 formulation (“if applicable”) to limit to actual expenses the deduction for care of an elderly or chronically

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ill household member: “[T]he debtor’s monthly expenses may include, i f applicable, the continuation of actual ex penses paid by the debtor that are reasonable and necessary” for that purpose. 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 ex ample—only to the extent that they are “actual . . ex penses” that are “reasonably necessary.” Additional deduc tions for energy are allowed, but again only if they are “actual expenses” that are “reasonable and necessary.” § 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 outstanding indebt edness” by the mere word “applicable,” meant as incorpo ration 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

*The Court protests that I misunderstand its use of the Collection Fi nancial Standards. Its opinion does not, it says, ﬁnd them to be incorpo rated 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 73. True enough, the opinion says that the Bankruptcy Code “does not incorporate the IRS’s guidelines,” but it im mediately 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.” Ante, at 72. In the present context, the real-world difference between ﬁnding the guidelines incorporated and ﬁnding it ap propriate 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 eligi bility for a car-ownership deduction requires anything other than owner ship of a car.

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owes no payments on his car nonetheless gets the operating- expense allowance. For the Court’s more strained interpre tation still produces a situation in which a debtor who owes only a single remaining payment on his car gets the full al lowance. As for the Court’s imagined horrible in which “a debtor entering bankruptcy might purchase for a song a junkyard car,” ante, at 79: That is fairly matched by the imagined horrible that, under the Court’s scheme, a debtor entering bankruptcy might purchase a junkyard car for a song plus a $10 promissory note payable over several years.

He would get the full ownership-expense deduction.

Thus, the Court’s interpretation does not, as promised, maintain “the connection between the means test and the statutory provision it is meant to implement—the authoriza tion of an allowance for (but only for) ‘reasonably necessary’ expenses,” ante, at 74. Nor do I think this difﬁculty is elim inated by the deus ex machina of 11 U. S. C. § 1329(a)(1), which according to the Court would allow an unsecured cred itor to “move to modify the plan to increase the amount the debtor must repay,” ante, at 79. Apart from the fact that, as a practical matter, the sums involved 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 78. 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, underallow ance) “is the inevitable result of a standardized formula like the means test . . . . Congress chose to tolerate the occa sional peculiarity that a brighter-line test produces.” Ibid.

Our job, it seems to me, is not to eliminate or reduce those “oddit[ies],” ibid., but to give the formula Congress

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adopted its fairest meaning. In my judgment the “applica ble 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.