In re Beasley, Case No. 07-40280, 2007 WL 2986124 (Bankr. M.D. Ga. October 9, 2007).  The issue was whether a Chapter 13 debtor could bifurcate a secured claim into secured and unsecured portions pursuant to §506 of the Code, pursuant to the "hanging paragraph" of §1325.  Ironically, the "new" (now 2 year old) law provides less protection to secured lenders when their collateral is not entirely under the debtor’s control.

There has been much debate in bankruptcy courts around the country as to the meaning and effect of the “hanging paragraph” provision added to § 1325(a) by BAPCPA. This Court has held, along with the majority of courts considering the section, that the hanging paragraph of § 1325(a)(*) simply has the effect of precluding debtors from bifurcating certain undersecured claims using § 506, as was common practice prior to the October 17, 2005 effective date of this BAPCPA provision.

Whatever the conclusion courts reach regarding the effect or meaning of the hanging paragraph, each court must determine whether the section applies by inquiring whether the four requirements of the section are satisfied: (1) the creditor has a purchase money security interest; (2) the debt was incurred within 910 days preceding the filing of the debtor’s case; (3) the collateral for the debt consists of a motor vehicle; and (4) the motor vehicle was acquired for the personal use of the debtor. …

Applying the Solis standard in this case leads to the conclusion that the Impala was not acquired for the debtor’s personal use. At the time of the acquisition, the car was acquired solely for the wife’s use. The Debtor has testified that he has never driven the vehicle or used it for his own purposes. The situation in this case is analogous to the Dodge Neon acquired in Solis, inasmuch as in both cases the Debtor never intended to use the car at the time of acquisition, and never made any substantial use of the car thereafter. Therefore, there was intended no significant or material portion of the use of the vehicle for the Debtor’s benefit, and the use of the Chevy Impala cannot be characterized as “personal use.” …

While the court does not necessarily approve of the result in the case at hand, Congress must be presumed to know what it is doing when it passes legislation. Debtors’ taking advantage of an apparent loophole in the legislation is not necessarily bad faith. Citi had an opportunity to object to confirmation of Debtor-Wife’s plan and failed to do so. There is no basis for denying confirmation of Debtor’s plan based on bad faith, because he is only attempting to do what the code allows him to do.