§ 132.8     910-Day PMSI Car Claims: Epilogue
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 132.8, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

BAPCPA created a new kind of claim in Chapter 13 cases that may be neither fish nor fowl for purposes of the rules for filing proofs of claim. The run-on sentence dangled by BAPCPA at the end of § 1325(a) describes a creditor with a purchase money security interest, a debt incurred within 910 days of the petition and collateral that consists of a motor vehicle acquired for the personal use of the debtor.1 The collateral can also be anything of value if the debt was incurred within a year of the petition. For purposes of § 1325(a)(5), “section 506 shall not apply” to a claim as just described.

[2]

There are many substantive problems with the management of a “secured” claim to which § 506 does not apply.2 For current purposes the issue is: What kind of proof of claim does a 910-day PMSI car lender file and by what deadline? Are there traps here for Chapter 13 debtors or for the special creditor described in the dangling sentence at the end of § 1325(a)?

[3]

The holder of a 910-day PMSI car claim probably wants to be a “secured claim” at least at first in order to be an allowed secured claim provided for under “paragraph (5) of section 1325(a).” If the 910-day PMSI car claim is an allowable secured claim, then the holder of the claim would be subject to the ordinary rules for the filing of proofs of claim by secured creditors.3 Those ordinary rules include the use of Official Form 10, statements of value on the face of the proof of claim and, though not without controversy, a filing deadline of 90 days after the first date set for the meeting of creditors.4

[4]

But what happens under the sentence hanging at the end of § 1325(a) when the 910-day PMSI car claim holder files a proof of claim asserting secured status? If § 506 shall not apply to this claim, is the claim holder bound by its assertion of secured status in subsequent confirmation litigation? Will the claim holder be estopped to assert that its claim cannot be valued or “crammed down” if it has filed a proof of claim under penalty of perjury that includes a valuation of collateral? How will a debtor know whether the proposed treatment through the plan is consistent with a 910-day PMSI car claim holder’s rights if the claim holder has filed an ordinary secured proof of claim? Does a creditor with any “thing of value” as collateral and a debt incurred within a year of the petition risk forfeiture of its rights under the dangling sentence in § 1325(a) if it files a secured proof of claim?

[5]

And if an ordinary Official Form 10 asserting secured status is not the right proof of claim for use by a 910-day PMSI car claim holder, what is the proper form and what filing deadline applies? If this creditor fills out Official Form 10 but does not fill in the parts of the form used by secured creditors to assert liens and value, the debtor and the Chapter 13 trustee will not know with certainty what kind of claim the creditor is asserting, and the proof of claim itself may not be accurate if the questions about value and collateral are not answered honestly and completely. Perhaps a 910-day PMSI car claim holder needs to modify Official Form 10 in some way to assert the special status in the hanging sentence without being dishonest or incomplete in the answers to questions on Official Form 10.

[6]

The possibility that the debtor will surrender collateral to the 910-day PMSI car claim holder probably makes it important that the claim holder file a timely proof of claim of some sort. Timely in this context would be before 90 days after the first date set for the meeting of creditors. Upon surrender of all collateral, the creditor described in the dangling sentence ends up with a wholly unsecured claim for any deficiency and will not participate in distributions to unsecured claim holders unless the creditor has timely filed an allowable proof of claim.


 

1  See 11 U.S.C. § 1325(a), discussed in §§ 451.1 [ In General: Modification Without § 506 ] § 75.1  In General: Modification Without § 506 and 462.1 [ 910-Day PMSI Car Claims: A Reprise ] § 87.7  910-Day PMSI Car Claims after BAPCPA: A Reprise.

 

2  See § 451.1 [ In General: Modification Without § 506 ] § 75.1  In General: Modification Without § 506.

 

3  See § 280.1 [ Secured Claim Holders ] § 132.7  Secured Claim Holders.

 

4  Id.