SDGa - Claim "Secured" by "910 Vehicle" Not Secured After All
11 U.S.C. §§ 506, 1325; Secured Claims
In re Carver, 2006 Bankr. LEXIS 327 (S.D. Ga. March 6, 2006) (Walker)
Debtors filed a Chapter 13, listing a vehicle (purchased within 910 days of filing) with a current value of $14,500 and subject to a claim of $15,000. Debtors' plan proposed to pay the entire $15,000 claim in monthly installments, without interest.
The issue was whether debtors must pay interest to a creditor whose collateral is a "910 vehicle." The court ruled that the "test of the statute plainly prevents 910 claims from being treated as secured under a Chapter 13 plan…. By creating a special provision solely for 910 claims, Congress has demonstrated an intent to treat them differently that other unsecured or secured claims, but it has not provided a basis for treating them preferentially." Therefore, in a Chapter 13 plan, a 910 claim must receive the greater of 1) the full amount of the claim without interest, or 2) the amount the creditor would receive if the claim were bifurcated and crammed down (secured portion with interest, unsecured portion pro rata). Since the creditor in this case would receive more than $15,000 if the secured portion were paid with interest, its objection was sustained.
Note: For further discussion of this issue, see this article at the ABI BAPCPA Blog.