Click for ENIGMA, Georgia Forecast

LegalConsumer.com Bankruptcy Research Notes - Beta 0.08 - (1300+ cases & articles, and counting...)

Topics:

Topic #51:

Keywords: 910 loans . car loans . surrender . deficiency judgment . hanging paragraph . Chapter 13 . autos .

Secured Debt: 910 Car Loans > does surrender of undersecured property = satisfaction in full of debt?

  • Selected Case
  • Topic Overview
  • 4 Cases on This Topic
  • ?

Case Summary Matter of Wright, 492 F.3d 829, 7th Cir., 7/3/2007, 13

Matter of Wright, 492 F.3d 829 (7th Cir. 2007)

View this case in Google Scholar: Matter of Wright, 492 F.3d 829 (7th Cir. 2007)

Topics

Secured Debt: 910 Car Loans > does surrender of undersecured property = satisfaction in full of debt?

4 Cases , IssueID 51
Ch 7 Means Test
Form 22A, Line 42
Ch 13 Means Test
Form 22C Line 47

Topic Description:

The issues argued in these cases are whether the hanging paragraph allows a debtor to surrender a 910 vehicle in full satisfaction of his debt. If not, then, "the remaining debt must be treated as an unsecured claim in the Chapter 13 plan. Although the debt "need not be paid in full, any more than [the debtors] other unsecured debts, [] it [cannot] be written off in toto while other unsecured creditors are paid some fraction of their entitlements." In re Miller

Lines of Cases:

A:

Yes, surrender fully satisfies the debt

B::

No, surrender does not fully satisfy the debt, the deficiency leaves creditor with an unsecured claim

Topic Background / Overview:

From In re Miller:

Before BAPCPA was enacted, a bankruptcy court could confirm a chapter 13 plan in one of three ways: (1) The debtor and creditor agreed on a plan; (2) the debtor retained the collateral and continued to make payments;[3] or (3) the debtor surrendered the collateral.[4] Tidewater Fin. Co. v. Kenney, 531 F.3d 312, 316 (4th Cir.2008). If the debtor chose the third option, "the creditor could pursue an unsecured deficiency claim if it had a right to collect a deficiency under applicable nonbankruptcy law." DaimlerChrysler Fin. Servs. Am. LLC v. Barrett (In re Barrett), 543 F.3d 1239, 1242 (11th Cir.2008). That deficiency is considered an unsecured claim under 11 U.S.C. § 506(a)(1), which reads:

An allowed claim of a creditor secured by a lien on property ... is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property ... and is an unsecured claim to the extent that the value of such creditor's interest ... is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property.
637*637 BAPCPA changed that statutory analysis by adding the hanging paragraph, which states that § 506 does not apply to § 1325(a)(5) if

the creditor has a [PMSI] securing the debt that is the subject of the claim, the debt was incurred within the 910-day [sic] preceding the date of the filing of the petition, and the collateral for that debt consists of a motor vehicle ... acquired for the personal use of the debtor....
11 U.S.C. § 1325(a)(*).[5] "The hanging paragraph prevents [§ 506's] bifurcation for secured claims that meet its criteria." Drive Fin. Servs., 521 F.3d at 347. Miller and DC agree that this case is covered by the hanging paragraph, because the vehicle qualifies as a "910 vehicle"—meaning that Miller purchased it within 910 days of his bankruptcy filing—and it was for his personal use.[6] We must decide what happens now that § 506 no longer applies to § 1325(a)(5).

Numerous courts have examined this issue, but with widely divergent results.

  • Type A = Yes, surrender fully satisfies the debt
  • Type B = No, surrender does not fully satisfy the debt, the deficiency leaves creditor with an unsecured claim
  • Type E = "Everything Else"
  • Cases for Zip
  • All Cases By Date
  • Cases A - Z

Cases for Zip , California Northern District Bankruptcy Court

Ninth Circuit Cases

No Ninth Circuit cases in database on this topic

Other Circuits

• In re Bowles

Bankr. M.D.N.C. - No. 08-50065 - 2009-08-19 - 13 ,

Google ID#: 15706436146836898191
(Type : )

Debtors were able to modify their confirmed plan because of unanticipated and substantial changes. These changes were debtors' loss of income and an appellate court ruling that negative equity is included in a purchase money claim protected from modification by Section 1325(a)'s hanging paragraph.

• In re Miller

5th Cir - 570 F. 3d 633 - 2009-06-05 - 13 ,

Google ID#: 16960905300343184856
(Type B : No, surrender does not fully satisfy the debt, the deficiency leaves creditor with an unsecured claim )

The hanging paragraph does not allow a debtor to surrender a 910 vehicle in full satisfaction of his debt; instead, the remaining debt must be treated as an unsecured claim in the bankruptcy reorganization plan. Although the debt "need not be paid in full, any more than [Miller's] other unsecured debts, [] it [cannot] be written off in toto while other unsecured creditors are paid some fraction of their entitlements

• In re Tompkins

Bankr.. S.D.N.Y. - 391 B.R. 560 - 2008-08-13 - 13 ,

Google ID#: 3751090264545608814
(Type A : Yes, surrender fully satisfies the debt )

Debtors in New York held to be able to surrender vehicles acquired within 910 days pre-petition in full satisfaction of the secured claim.

• Matter of Wright

7th Cir. - 492 F.3d 829 - 2007-07-03 - 13 ,

Google ID#: 2966419031652454255
(Type B : No, surrender does not fully satisfy the debt, the deficiency leaves creditor with an unsecured claim )

Surrender of vehicles acquired within 910 days pre-petition does not fully satisfy the debt which the vehicle secures.

• In re Bowles

Bankr. M.D.N.C. - No. 08-50065 - 2009-08-19 - 13 ,

Google ID#: 15706436146836898191
(Type : )

Debtors were able to modify their confirmed plan because of unanticipated and substantial changes. These changes were debtors' loss of income and an appellate court ruling that negative equity is included in a purchase money claim protected from modification by Section 1325(a)'s hanging paragraph.

• In re Miller

5th Cir - 570 F. 3d 633 - 2009-06-05 - 13 ,

Google ID#: 16960905300343184856
(Type B : No, surrender does not fully satisfy the debt, the deficiency leaves creditor with an unsecured claim )

The hanging paragraph does not allow a debtor to surrender a 910 vehicle in full satisfaction of his debt; instead, the remaining debt must be treated as an unsecured claim in the bankruptcy reorganization plan. Although the debt "need not be paid in full, any more than [Miller's] other unsecured debts, [] it [cannot] be written off in toto while other unsecured creditors are paid some fraction of their entitlements

• In re Tompkins

Bankr.. S.D.N.Y. - 391 B.R. 560 - 2008-08-13 - 13 ,

Google ID#: 3751090264545608814
(Type A : Yes, surrender fully satisfies the debt )

Debtors in New York held to be able to surrender vehicles acquired within 910 days pre-petition in full satisfaction of the secured claim.

• Matter of Wright

7th Cir. - 492 F.3d 829 - 2007-07-03 - 13 ,

Google ID#: 2966419031652454255
(Type B : No, surrender does not fully satisfy the debt, the deficiency leaves creditor with an unsecured claim )

Surrender of vehicles acquired within 910 days pre-petition does not fully satisfy the debt which the vehicle secures.

All Cases A to Z

  • In re Bowles, No. 08-50065 , (Bankr. M.D.N.C. ) 2009-08-19, #15706436146836898191
  • In re Miller, 570 F. 3d 633 , (5th Cir ) 2009-06-05, #16960905300343184856
  • In re Tompkins, 391 B.R. 560 , (Bankr.. S.D.N.Y. ) 2008-08-13, #3751090264545608814
  • Matter of Wright, 492 F.3d 829 , (7th Cir. ) 2007-07-03, #2966419031652454255

FAQ/Help:

How to use case law (it can be tricky)

If you're not familiar with what "case law" is, and how to use it, check out Chapter 7 of Nolo's LegalResearch: How to Find and Understand the Law for a guide to how to read through a case to get the parts that matter.

Also, you need to be familiar with the concept of "jurisdiction." Here are some helpful links:

When you read a case, check to make sure that the case's decision applies to your local district. Do this by looking at which court has decided the case -- either the U.S. Supreme Court, a court of appeal (listed here in large type), or a district court (listed in small type).  Your local district court judge is not bound to follow the opinion of judges from other district courts, but often they look to these cases for advice. Your local district, however, is bound  to follow decisions in cases from it governing circuit court. You'll see fairly few Supreme Court case here, but those cases are also binding on all districts."

Are these all the bankruptcy cases there are?

NO! NO! NO! This is a start for your research. New cases are constantly being decided. I update this when I have time. This is only a fraction of the actual published opinions out there. Dozens of cases are handed down nationwide every week. I catalog interesting ones when I have time. They are meant to serve as a starting point for your research -- NOT as a comprehensive listing of the current state of the law.

 

DISCLAIMER. By using this database you acknowledge and agree to the following:

This database does not contain every relevant case in every district on the topics covered; there are high priced services for that. This is free. It is offered to the public "as is" as an adjunct to the Nolo books, How to File Chapter 7 Bankruptcy, and Chapter 13 Bankruptcy: Keep Your Property and Repay Your Debts Over Time (10th Edition, 2010): which I co-author with attorney Stephen Elias.

This database is updated as time permits. Do not assume that it has the latest case in your district. We are still filling holes in the database -- and will always be. Use it as a place to start your reasearch, rather than the final answer to your question.

Some of these issues involve the discretion of the judge which can vary from judge to judge. So, even if you find a case just like yours where a judge went your way, as they say in the car biz, "your mileage may vary..."

If you're not familiar with what "case law" is, and how to use it, check out Chapter 7 of Nolo's LegalResearch: How to Find and Understand the Law for a guide to how to read through a case to get the parts that matter.

For more help, click the "?" tab.

 


Site Map  |  Back to Top 

 

  • Can't Find What Your're Looking For?

  • Google Search the Web

Better Business Bureau -- A+ Rating

Website and calculator content by Albin Renauer, co-author of How to File For Chapter 7 Bankruptcy (Nolo 2011)
LegalConsumer.com website & means test calculator ©2005 - 2013 RelationalVision, LLC. All rights reserved.
Users of this site agree to the Terms of Service and Privacy Notice.