In re Bonner, No. 06-50472, 2006 Bankr. LEXIS 1497 (Bankr. M.D. Ga. July 19, 2006) (Hershner).

Debtor entered into a pre-petition closed-end lease for a used 1997 Cadillac.  The lease provided for a set number of payments (36), with an option to purchase for $1,962.50 at the end of the lease.  The debtor’s Chapter 13 plan proposed to pay the value of the vehicle, plus interest, on the basis that the lease was really a disguised security agreement because of the de minimus option price at the end of the lease.  Debtor presented evidence that the vehicle would only be worth $1,000-$1,500 at the end of the lease and not worth the option price.  The lessor objected to the plan.

The court found the lease was a true lease under Georgia state law —

Respondent signed a Closed End Motor Vehicle Lease with a term of thirty-six months. Respondent must surrender possession of the vehicle at the end of the lease term, unless Respondent exercises his option to purchase. Respondent is not obligated to purchase the vehicle or to renew the lease. Respondent may have to pay a substantial charge if he terminates the lease early.  Respondent must pay $ 1,962.50 to exercise his option to purchase at the end of the lease. The vehicle has not been maintained and is on "its last legs." At the end of the lease the vehicle will be worth less than the option price. The Court is not persuaded that Respondent, at the end of the lease, can purchase the vehicle for a nominal price as that term is used in O.C.G.A. § 11-1-201(37).

The Court is persuaded that the lease agreement is a true lease and not a security agreement.