§ 75.1     In General: Modification Without § 506
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 75.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Perhaps the most challenging of all the consumer bankruptcy amendments in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 is the dangling, unnumbered and unlettered new sentence at the end of § 1325(a):

For purposes of paragraph (5), section 506 shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest 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 (as defined in section 30102 of title 49) acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing.2
[2]

The House Report that accompanied the passage of BAPCPA gives this unhelpful description of the new sentence:

[Section 306(b) of BAPCPA] adds a new paragraph to section 1325(a) of the Bankruptcy Code specifying that Bankruptcy Code section 506 does not apply to a debt incurred within the two and one-half year period preceding the filing of the bankruptcy case if the debt is secured by a purchase money security interest in a motor vehicle acquired for the personal use of the debtor within 910 days preceding the filing of the petition. Where the collateral consists of any other type of property having value, section 306(b) provides that section 506 of the Bankruptcy Code does not apply if the debt was incurred during the one-year period preceding the filing of the bankruptcy case.3
[3]

This new sentence was inserted by BAPCPA at the end of § 1325(a)—after § 1325(a)(9)—but the reference to “paragraph (5)” seems to refer to § 1325(a)(5), which begins, “with respect to each allowed secured claim provided for by the plan.”4

[4]

Bankruptcy practitioners know that “allowed secured claim” is a term of art determined under § 506(a)(1): “An allowed claim of a creditor secured by a lien on property in which the estate has an interest . . . is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property.”5 The new hanging sentence says that § 506 shall not apply to an allowed secured claim provided for by the Chapter 13 plan.

[5]

If § 506 “shall not apply” to a claim described in the hanging sentence, it is not a stupid question to ask how a lienholder becomes an “allowed secured claim” for purposes of § 1325(a)(5) without first applying § 506(a)(1)? Section 506(a)(1) is the only provision of the Bankruptcy Code that addresses how an allowed claim becomes an allowed secured claim. A claim must first become an allowed secured claim before § 1325(a)(5) would apply. Do we first apply § 506(a)(1) to determine whether we have an “allowed secured claim” and then § 506 “shall not apply” to that claim if the conditions (discussed below) are present? There does not seem to be any other way to give purpose to the new hanging sentence. But this is just the beginning of our problems.

[6]

Assume for a long moment that we are allowed to apply § 506(a)(1) to determine that we have an allowed secured claim that can be provided for by the plan. What then does it mean that § 506 “shall not apply” to that claim? Although the hanging sentence doesn’t say so, could it mean that § 506 does not apply to all determinations subsequent to the initial application of § 506(a)(1) to determine that we have an allowed secured claim for purposes of § 1325(a)(5)?

[7]

Following this logic, there are at least five aspects of § 506 that would not apply to an allowed secured claim described in the new hanging sentence:

 

  
Under § 506(a)(1), after the initial determination that the allowed claim is a secured claim, the statutory valuation rules would no longer be available. This has enormous implications for many things that happen regularly in Chapter 13 cases—for example, the surrender of collateral to an allowed secured claim holder through the confirmed plan.6
 

 

 

 

  
Section 506(a)(2) contains special valuation rules specific to Chapter 7 and Chapter 13 cases.7 These special valuation rules enacted by BAPCPA require the use of replacement value, prohibit deductions for costs of sale or marketing under some circumstances and fix the timing for valuations. These new provisions would not apply.
 

 

 

 

  
Under § 506(b), oversecured creditors are allowed “interest . . . and any reasonable fees, costs or charges provided for under the agreement or state statute under which such claim arose.”8 Oversecured claims described in the new hanging sentence would not be entitled to interest, fees, costs or other charges under § 506(b).9
 

 

 

 

  
Section 506(c) permits a trustee to recover from property securing an allowed secured claim the reasonable and necessary costs and expenses of preserving or disposing of the property to the extent of benefit to the secured claim holder. This power to surcharge collateral would not apply to any claim described in the new hanging sentence that was an allowed secured claim provided for by the Chapter 13 plan.
 

 

 

 

  
Section 506(d) voids a lien securing a claim that is not an allowed secured claim under some circumstances. Only allowed secured claims provided for by the plan under § 1325(a)(5) are subject to the hanging sentence at the end of § 1325(a). It is not obvious how § 506(d) would apply to a claim described in the new hanging sentence unless it applies during the initial (nonstatutory) run through § 506 to get to § 1325(a)(5). Once the debt is an allowed secured claim, § 506(d) does not apply.
 

 

 

[8]

If § 506 does not apply to a claim described in the new hanging sentence—after the first application of § 506 to determine that we indeed have an allowed secured claim provided for by the plan—then there are several subsequent determinations in § 1325(a)(5) that are problematic without the use of § 506. For example, under § 1325(a)(5)(B)(ii), with respect to an allowed secured claim provided for by the plan, the value as of the effective date of the plan of property to be distributed under the plan must be not less than “the allowed amount of such claim.”10 Under normal circumstances, this would be the “present value” requirement that ensures a lienholder receives the discounted present value of its allowed secured claim when the debtor retains property and pays the allowed secured claim in installments over time through the plan.11 But how would the “allowed amount of such claim” be determined for § 1325(a)(5)(B)(ii) purposes if § 506 does not apply? “Such claim” refers to the “allowed secured claim provided for by the plan” in the first sentence of § 1325(a)(5).12 The allowed amount of that secured claim was determined applying § 506(a)(1). Do we continue to use the allowed amount of the secured claim determined before we stopped applying § 506, or does the hanging sentence require us to determine the allowed amount of “each allowed secured claim provided for by the plan” by some method that does not involve the use of § 506?

[9]

What happens if the debtor surrenders the property securing a hanging-sentence claim under § 1325(a)(5)(C)?13 If the surrendered property has a value at liquidation less than the allowed amount of the claim, is there a deficiency claim? How can a deficiency claim be determined unless we first value collateral and perform the calculations in § 506(a)(1)? Section 506(a)(1) is the only section of the Bankruptcy Code that determines an undersecured creditor’s right to an unsecured claim when the value of collateral is less than the amount of the allowed claim. Without § 506, what claim, if any, does the creditor have after surrender of collateral? Debtors have argued successfully that surrender eliminates altogether any claim described in the new hanging sentence.14 Creditors have responded more successfully that the debt remaining after credit for liquidation of surrendered collateral is the balance of the allowed claim without regard to § 506(a)(1).15

[10]

And what about the new “adequate protection” right at confirmation in § 1325(a)(5)(B)(iii)(II)? The holder of a claim secured by personal property is entitled to periodic payments sufficient “to provide . . . adequate protection during the period of the plan.”16 Without § 506, how will adequate protection rights be determined? Section 506(a)(1) and (2) ordinarily would be used to determine the value of collateral for purposes of adequate protection under § 361. If § 506 does not apply, bankruptcy practitioners will have to look somewhere else for a protocol to determine the value that must be adequately protected with respect to hanging-sentence claims provided for by a Chapter 13 plan.

[11]

Creditors will argue that the hanging sentence in § 1325(a) was intended to compel full payment of any debt described in the new sentence without regard to the value of collateral. If that is what was intended—and there is no evidence of that in the House Report quoted above—then why did Congress use different words in the hanging sentence at the end of § 1325(a) than in § 1325(a)(5)(B)(i)(I)(aa)? The new lien retention language in § 1325(a)(5)(B)(i)(I)(aa) states that the holder of an allowed secured claim must retain its lien until “payment of the underlying debt determined under nonbankruptcy law” or discharge under § 1328.17 There is nothing similar to “payment of the underlying debt” in the hanging sentence at the end of § 1325(a). It would be seriously odd for Congress to use such different words to convey the same meaning in a single section.

[12]

Other possible interpretations of the new hanging sentence are equally unsatisfying. If § 506 does not apply to certain “allowed secured claims” provided for by § 1325(a)(5), then it could be said that the debts described in the hanging sentence are just sui generis—a new class of debt that BAPCPA defines to exist only in Chapter 13 cases. These new 910-day PMSI car claims and claims incurred within a year and secured by anything of value break the mold: they are “secured” in the sense that there is a lien as defined in the hanging sentence; any statutory process that depends on § 506 is disabled with respect to these special debts; and potential treatments and entitlements under the Chapter 13 plan must be determined without use of § 506.

[13]

To get here, we first have to have an allowed secured claim that is provided for under § 1325(a)(5). We are stuck (again) using § 506 at least to determine that there is an allowed secured claim for § 1325(a)(5) purposes. Without that step, we don’t have a use for the new hanging sentence—a vacuum we should avoid.

[14]

Once we are “in” to the hanging sentence, only treatments and entitlements that are not dependent on § 506 are available. The new valuation rules in § 506(a)(2)18 are off limits. It is possible that courts will find or concoct some basis other than § 506 to value collateral under the hanging sentence, but this seems unlikely because § 506 so explicitly addresses exactly that task and § 506 “shall not apply.”

[15]

Some courts will read § 1325(a)(5)(B)(ii) to require the plan to pay the present value of “such claim”—the allowed secured claim—to accomplish confirmation. The difficult question then becomes whether “such claim” is determined before or after § 506 shall not apply. If such claim is the allowed secured claim determined using § 506—before the hanging sentence kicks in and disables that use—then claim splitting is still alive in Chapter 13 cases, even for the special debts that fall within the new hanging sentence. If such claim means the hanging sentence debt after § 506 is off the table, then we have the conundrum that we don’t know how we got to the hanging sentence in the first instance.

[16]

Overlooking that (huge) problem for a moment, if such claim is determined without application of § 506, it could be that the allowed amount of this new kind of debt would be the entire debt, without regard to the value of the collateral. In other words, the hanging sentence could be interpreted to create a new kind of Chapter 13 debt that slips into § 1325(a)(5), and once in, such claim is the entire debt for purposes of confirmation, without further use of § 506.

[17]

Under this interpretation, is such debt a fully secured debt or something else? BAPCPA does not answer this question clearly. The allowed secured claim that got us into § 1325(a)(5) and then into the hanging sentence is not the entire debt unless the entire debt was fully secured in the first instance—before we were forbidden to use § 506. If that allowed secured claim morphs into an allowed claim for the full amount of the debt without regard to the extent of security, such claim in § 1325(a)(5)(B)(ii) has been contorted by a heretofore unknown canon of statutory construction.

[18]

Can any sense be made of § 1325(a)(5) on this track? Only by intellectual dishonesty. If such claim is redefined as the “allowed claim” of the special lienholder, rather than the “allowed secured claim” that started this whole train of thought, then an argument can be constructed that the hanging-sentence lienholder is entitled to the present value of its entire debt at confirmation, without consideration of the value of its collateral.

[19]

This dishonesty leads to other strange places. Is any allowable secured claim sufficient to get to the special debt status just described? If some allowable secured claim is required at the threshold, then before we disable the use of § 506, we must value the collateral and verify that there is at least a peppercorn of allowable secured claim. Following this (uncomfortable) logic, a creditor with $1 of collateral to secure its $10,000 debt gets $10,000 plus interest as a condition for confirmation.19 If the debtor surrenders the $1 of collateral before (or after?)20 the petition, the lienholder’s special entitlement evaporates entirely.

[20]

Under this construct, unsecured creditors and Chapter 13 trustees will howl with righteous outrage when the plan proposes to keep collateral that is substantially less valuable than the debt it secures. By this analysis, the hanging sentence creates a new classification of unsecured debt that must be paid in full with postconfirmation interest to confirm a plan that deals with an undersecured hanging-sentence claim. There is no exception for this new debt in § 1322(a) or (b)—arguably, the unfair discrimination standard is in play21 and Chapter 13 debtors will face trial by fire to justify the fairness of paying $10,000 plus interest to a lienholder that is only nominally secured.

[21]

There is another possible treatment for the hanging-sentence claim that is not limited by the value of the security: perhaps it must be paid in full to accomplish confirmation but not necessarily with present value interest. This would be akin to the treatment a partially secured creditor realizes in a Chapter 11 case by electing to be fully secured under § 1111(b).

[22]

The obvious problem with this alternative is the absence of language in § 1325(a) similar to the well-understood language in § 1111(b)(2). Courts would have to find that the phrase “section 506 shall not apply” in the hanging sentence at the end of § 1325(a) means the same or something similar to “notwithstanding section 506(a) . . . such claim is a secured claim to the extent such claim is allowed” in § 1111(b)(2). This is quite a stretch for many obvious reasons.

[23]

The first round of reported decisions interpreting the hanging sentence at the end of § 1325(a) reached three different positions with respect to what the section means. There was a strong majority view that has since matured into unanimity and two thinly supported minority positions that have been undone by appellate decisions.

[24]

More than four dozen courts—including the U.S. Courts of Appeals for the Fourth, Fifth, Sixth, Eighth, Tenth and Eleventh Circuits—have concluded that a claim falling within the hanging sentence becomes a secured claim for the entire amount of the allowed claim; that fully secured claim can then be modified consistent with § 1322(b)(2), except that the claim cannot be bifurcated or stripped down to the value of the collateral; and, most of these courts require the entire allowed claim to be paid in full with present value interest at the rate specified by the Supreme Court in Till v. SCS Credit Corp.22 These courts reason that the hanging sentence does not prevent an allowed secured claim from arising for § 1325(a)(5) purposes, it just prohibits bifurcation of a hanging-sentence claim into secured and unsecured portions using § 506. The hanging-sentence claim then can be modified in other ways using § 1322(b)(2), and one obvious permitted modification is re-amortization with present value interest consistent with Till. As explained by the Bankruptcy Court for the Middle District of North Carolina in In re Shaw:23

[B]ecause § 506 is not applicable, bifurcation of the Creditor’s claim into secured and unsecured portions is not permitted . . . . [A] creditor’s secured status is dictated by state law while the treatment of secured claims is dictated by the Bankruptcy Code. As such, even though the Hanging Paragraph makes § 506 inapplicable to certain secured claims, it does not mean that claims covered by the Hanging Paragraph are no longer secured. . . . [Section] 1325(a)(5) continues to apply to those claims. . . . When Congress enacted BAPCPA, it is presumed to have known of the Supreme Court’s decision in Till. . . . [G]iven Congress’s knowledge of the Till decision and Congress’s decision not to change to [sic] the applicable statutory language when enacting BAPCPA, this court concludes that the Till rate remains the proper interest rate with which secured claims must be paid to meet the requirements of § 1325(a)(5)(B)(ii).24
[25]

There are three premises underlying the majority position. First, claims described in the hanging sentence become allowed secured claims and are entitled to treatment under § 1325(a)(5) without using § 506. In other words, most of the majority courts do not use § 506 initially to identify claims that can be allowed secured claims; rather, these courts look outside of § 506—typically to state law—to find security interests and lien rights that become allowable secured claims unfiltered by § 506. For the most part, the majority courts do not address the concern that debts—both secured and unsecured—arise under state law but claims are creatures of bankruptcy law that are classified, allowed and disallowed based on Bankruptcy Code provisions such as § 506. Without § 506, at least at the threshold, the majority position leaps to the conclusion that a lienholder becomes an allowed secured claim holder to the full extent of its state law debt.25

[26]

Second, the majority position concludes that the hanging sentence stops bifurcation or claim splitting because § 506 is not available but the hanging sentence does not disable § 1322(b)(2).26 Chapter 13 debtors can still modify secured claims that fall within the hanging sentence; Chapter 13 debtors cannot split a hanging-sentence claim into its secured and unsecured components even when the collateral is worth less than the amount of the debt. The majority courts do not explain why there is no exception in § 1322(b)(2) for debts that fall within the hanging sentence. This issue arises because § 1322(b)(2) contains an exception to the power to modify for claims secured only by a security interest in real property that is the debtor’s principal residence.27 If Congress intended to except hanging-sentence claims from one aspect of the power to modify in § 1322(b)(2), it certainly knew how to do that. On the other hand, the absence of a reference in § 1322(b)(2) to the hanging sentence has led the majority courts to conclude that all the rest of the modification powers provided by § 1322(b)(2) are available to Chapter 13 debtors with respect to debt that is protected from claim splitting (only). Chapter 13 debtors in districts adopting the majority position must treat a debt that falls within the hanging sentence as if it was fully secured, but the monthly payment, the duration of payments and the interest rate on that debt can be modified.

[27]

Third, in a district adopting the majority interpretation of the hanging sentence, except for the power to bifurcate or strip down an undersecured debt, all of the usual § 1325(a)(5) rules apply. Among those rules is the present value requirement in § 1325(a)(5)(B)(ii) which was interpreted by the Supreme Court in Till to require interest at prime plus a risk factor.28 BAPCPA extensively modified § 1325(a)(5) to include an equal monthly payment requirement in § 1325(a)(5)(B)(iii)(I)29 and an “adequate protection” entitlement in § 1325(a)(5)(B)(iii)(II).30 BAPCPA also redefined the lien retention rules in Chapter 13 cases by amendments to § 1325(a)(5)(B)(i).31 Under the majority view, a claim protected from bifurcation by the hanging sentence is still entitled to the present value, equal payments, adequate protection and lien retention provisions of § 1325(a)(5).

[28]

There were two minority positions with respect to the meaning of the hanging sentence at the end of § 1325(a)—both of which have not survived appellate review. In one of the first reported decisions addressing the hanging sentence, the Bankruptcy Court for the Southern District of Georgia in In re Carver32 read the expulsion of § 506 literally to require that claims falling within the hanging sentence could not be allowed secured claims. Here is the Carver explanation:

Without application of § 506(a), a claim is merely an allowed claim; it cannot be a secured claim. With that understanding of § 506, the hanging paragraph must be read to provide that for purposes of § 1325(a)(5), a 910 claim is not a secured claim . . . . The only generally applicable definition of a secured claim comes from § 506. By rendering that section inapplicable to 910 claims, Congress expressly eliminated the mechanism by which they could be treated as secured under the Chapter 13 plan. . . . “The fact that Congress considered but rejected legislation” that would have given 910 claim[s] fully secured status supports the conclusion that it did not intend 910 claims to be treated as secured claims under a Chapter 13 plan. . . . [I]t is unlikely that Congress singled out the creditor with a 910 claim in order to punish it. More likely . . . Congress intended to treat such claims better than they would have been treated under former law. . . . Using § 1111(b) as a guide . . . [i]n 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 (i.e., secured portion paid with interest and unsecured portion paid pro rata).33
[29]

There is some appeal to the logic in Carver because it gives full effect to the fundamental instruction in the hanging sentence that § 506 shall not apply. But Carver left unanswered why Congress used language so different from that found in § 1111(b)(2) if it intended to mimic one of the possible outcomes under that other section. There was no stampede of other courts to the Carver interpretation and Carver was overruled by the U.S. Court of Appeals for the Eleventh Circuit in 2008.34

[30]

A third interpretation of the hanging sentence adopted part of the Carver reasoning but with a twist. The bankruptcy courts in In re Wampler35 and In re Taranto36 agreed with Carver that the hanging sentence prohibits application of § 506 with the result that a hanging-sentence claim cannot be an allowed secured claim for purposes of § 1325(a)(5). Unlike Carver, both courts then concluded that a hanging-sentence claim must be paid in full without regard to the value of collateral. Because the hanging-sentence debt could not be an allowed secured claim, it was not entitled to present value interest under § 1325(a)(5)(B)(ii). As explained in Wampler:

The provisions of §§ 502 and 506, read together, establish the only means by which a court may determine that an allowed claim should be allowed as a secured claim. . . . [F]or the purposes of claims allowance in bankruptcy, if § 506 does not apply, a creditor may be entitled to an allowed, albeit unsecured claim. . . . Because § 506 does not apply to creditors whose claims fall under the umbrella of the 910 Language and the only means by which said creditors are entitled to an allowed secured claim is by determination under the provisions of § 506, those creditors cannot hold allowed secured claims and are not entitled to the same treatment found in § 1325(a)(5). . . . [I]n order to give the phrase “allowed secured claim” as employed by § 1325(a)(5) meaning without rendering the 910 Language meaningless, it must be read to reference claims that have been allowed as secured after the application of § 506(a). Because the 910 Language renders § 506 inapplicable for the purposes of § 1325(a)(5), which addresses only those claims that are allowed secured claims by operation of § 506(a), creditors whose claims fall within the 910 Language are not entitled to the protections that creditors with secured claims allowed under § 506(a) find in § 1325(a)(5). . . . [A]llowing postpetition interest to accrue on claims falling under the 910 Language, which are not allowed secured claims within the meaning of § 506(a), does not comport with the view of § 1325(a)(5)(B)(ii) espoused in Till. . . . The 910 Language requires that the allowed claim be paid in full, but by making the provisions of § 506 inapplicable, does not mandate treatment of the claim as an allowed secured claim requiring the payment of postpetition interest under § 1325(a)(5)(B)(ii). . . . The 910 Language does not alter the debtor’s prepetition lien, but provides for a separate and distinct treatment of the allowed claim. As allowed, but not secured claims, 910 Claims may not include unmatured or, in this case, postpetition interest.37
[31]

Wampler and Taranto were not altogether satisfying constructions of the hanging sentence. Declaring a hanging sentence claim to be free of § 1325(a)(5) leads to disturbing possibilities beyond the loss of present value interest under § 1325(a)(5)(B)(ii). It is hard to then find an anchor anywhere in the Bankruptcy Code for what the required treatment would be for a debt that falls within the hanging sentence. Wampler was overruled by the U.S. Court of Appeals for the Tenth Circuit.38 Taranto is not consistent with subsequent authority from the U.S. Court of Appeals for the Sixth Circuit.39

[32]

Drilling into the hanging sentence, § 506 shall not apply when the creditor has a purchase money security interest,40 the debt was incurred within 910 days preceding the petition and the collateral is a motor vehicle41 acquired for the personal use42 of the debtor, or when the collateral consists of any other thing of value43 and the debt was incurred within one year before the petition. There are several important catchphrases here. “Personal use” is unusually specific and is reasonably interpreted to exclude use by anyone other than the debtor.44 A car acquired for the personal use of a nonfiling spouse might not fall within the new hanging sentence.45 Similarly, a car acquired for the use of the debtor’s child or for use in the debtor’s business was not acquired for the debtor’s personal use. The limits of this analysis will be tested when a car was acquired for more than one use, one of which was the personal use of the debtor.46

[33]

The creditor must have a purchase money security interest. Purchase money status is sometimes lost or at least polluted when purchase money loans have been refinanced, when part of the loan is purchase money and part is not and when collateral is replaced or loses its character as a consumer good.47 The courts are completely flummoxed with respect to whether the financing of “negative equity” forfeits purchase money status for purposes of the hanging sentence.48 The failure of the UCC drafters to reach consensus with respect to “dual status” or the “transformation rule” has been visited on Chapter 13 practitioners through the hanging sentence.49

[34]

“Any other thing of value” reaches broadly to include almost any security interest incurred within a year.50 There is disagreement whether any other thing of value includes motor vehicles addressed in the preceding portion of the sentence.51 Preferred sentence construction probably applies the “purchase money” limitation to security interests in “anything of value.”52 It is likely that the “personal use” requirement does not apply to any other thing of value that secures a purchase money debt incurred within the year before the petition. There are battles ahead with respect to whether any other thing of value includes items of de minimis value such as clothes or personal items purchased within a year of the petition.

[35]

The hanging sentence may rekindle the debate about Chapter 13 plans that do not “provide for” an allowed secured claim. Under pre-Bankruptcy Code practice, it was not uncommon for a Chapter XIII plan to omit a secured claim holder because, without the lienholder’s consent, a Chapter XIII debtor could not force participation in the plan.53 What would be the rules for confirmation of a plan that made no provision for a claim of the kind described in the new hanging sentence? For example, could the debtor continue to make contract payments to a purchase money lienholder without engaging § 1325(a)(5) or the new hanging sentence? Will Chapter 13 trustees object to any such plan, especially if the effect is to pay an undersecured claim holder more favorably than would otherwise be allowed if the claim were “provided for” by the plan?

[36]

The hanging sentence may interrupt the usual condition that collateral must be property of the estate before a creditor can have an allowed secured claim in a Chapter 13 case. Section 506 allows a claim to become a secured claim only to the extent of the lienholder’s interest in the estate’s interest in property. If § 506 does not apply, does the hanging sentence capture debts that are secured by property that is not property of the estate or property of the debtor? It is not immediately obvious how a claim secured by property that is not property of the Chapter 13 estate would become a claim “described in [§ 1325(a)(5)],” but there is the uncertain effect of the renvoi in the hanging sentence: if the plan provides for a hanging-sentence lienholder and the lienholder files a proof of claim, would § 506 apply when the trustee objects to allowance of the claim on the ground that the collateral is not property of the estate?

[37]

The hanging sentence invites creativity from Chapter 13 debtors’ attorneys in the management of 910-day PMSI car claims and claims secured by other things of value incurred within a year of the petition. There is enough uncertainty of interpretation in the hanging sentence that debtors should consider offering alternative plan provisions with respect to hanging-sentence claims.

[38]

For example, a debtor who purchased a car for personal use within 910 days of the petition might value the car in the ordinary way and invite the lienholder to accept installment payments of that value plus interest through the plan under § 1325(a)(5)(A).54 If the lienholder does not accept that proposal, the plan would default to surrender of the car under § 1325(a)(5)(C).55 Alternative plan proposals of this sort put the underlying economic issues on the table for the debtor and the lienholder. If the likely economic loss from surrender exceeds the valuation and interest rate offered by the debtor, some lienholders will make the rational economic choice and accept the debtor’s proposal. Debtors can value cars and other collateral realistically, and if the offered value is not acceptable to the creditor, the debtor is probably better off surrendering and replacing the car or other item at a fairer market value. A Model Plan (BAPCPA) with options of this sort can be found in Appendix GG.

[39]

Imagine a Chapter 13 debtor with a 910-day PMSI car that falls within the hanging sentence at the end of § 1325(a). At the petition, the car has a replacement value of $8,000 and is subject to a purchase money claim of $10,000. Taking the majority position, the lienholder would argue it has an entitlement under the hanging sentence to a $10,000 claim that must be paid in full with present value interest through any confirmed plan. The debtor can replace the car with a similar car for $8,000 plus some transaction costs. A reasonable Chapter 13 plan might present two alternatives: $8,500 through the plan with present value interest or surrender the car. If the car lender cannot repossess and liquidate the car for at least $8,500 (present value), the car lender will be economically better off to accept the debtor’s $8,500 proposal rather than deal with surrender of the car. The possibility that surrender of a 910-day PMSI car fully satisfies the underlying debt puts teeth in this alternative.56

[40]

The hanging sentence in § 1325(a) may have changed the statutory rights of some lienholders at confirmation in Chapter 13 cases, but it did not change the basic economics of a Chapter 13 case. Chapter 13 debtors are rarely advantaged to pay more than the real economic value of collateral through a plan. Chapter 13 debtors can always surrender collateral—with or without consent of the lienholder.57 Creditors with liens on personal property can rarely realize full replacement value after surrender given the costs of reacquiring the collateral, refurbishing the collateral and selling the collateral. There is much room for negotiation and compromise between these economic realities. In many ways, cramdown under the Bankruptcy Code before BAPCPA mimicked the economic reality of depreciated collateral in a debtor-creditor relationship.58 BAPCPA distorts the relative legal positions of the Chapter 13 debtor and some lienholders, but BAPCPA didn’t change the reality that Chapter 13 debtors can refuse to overpay for the right to keep collateral.

[41]

Debtors should hesitate before confirming a plan that treats a 910-day car claim as fully secured. Detailed elsewhere,59 after confirmation of a plan that treats a 910-day PMSI car claim as fully secured, in some circuits the debtor cannot surrender the collateral or suffer postconfirmation relief from the stay and escape treatment of the debt as fully secured.60

[42]

Don’t forget that BAPCPA made no change to the “present value” language in § 1325(a)(5)(B)(ii). Except with respect to real-estate-secured claims protected from modification by § 1322(b)(2),61 Chapter 13 debtors can modify the rights of secured claim holders, including that the plan can modify the interest rate on a secured claim paid through the Chapter 13 plan. Even a debt described in the hanging sentence can be paid through the confirmed plan at an interest rate substantially different from the contract rate. As indicated above, Till v. SCS Credit Corp.62 has been applied by many courts to determine the present value interest rate at confirmation for claims otherwise protected from § 506 by the hanging sentence.63

[43]

A final procedural issue is the question whether a creditor holding a 910-day PMSI claim must object to confirmation to dodge a plan that fails to respect the protection from § 506 in the hanging sentence. This is a species of the issue whether silence subjects a secured creditor to treatment through a confirmed plan that could have been defeated had the creditor timely objected—in other words, whether silence will be interpreted as acceptance of the plan.64

[44]

Several courts have recognized that the hanging sentence is “mandatory” in the sense that upon timely objection, a plan cannot be confirmed that bifurcates or crams down a debt protected from § 506 by the hanging sentence.65 A few courts have morphed this notion that the hanging sentence is “mandatory” into a rule that prohibits confirmation of any plan that crams down a 910-day PMSI car claim notwithstanding the absence of objection from the car lender.66 For reasons certainly not compelled by the hanging sentence itself, these courts depart from the general rule that lienholders must protect themselves by objecting to confirmation of any plan that proposes a treatment that is inconsistent with § 1325(a)(5).67 No lienholder that believes it is protected from § 506 by the hanging sentence should rest easy that the bankruptcy judge will object to confirmation when the lienholder does not.


 

1  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

2  11 U.S.C. § 1325(a). The courts have struggled to cite the hanging sentence at the end of § 1325(a). See, e.g., In re Feddersen, 355 B.R. 738 (Bankr. S.D. Ill. 2006) (“the Anti-Cram Down Paragraph . . . awkwardly incorporated into § 1325(a)(5)”); In re Turner, 349 B.R. 437 (Bankr. D.S.C. 2006) (“the flush language of § 1325(a)”); In re Payne, 347 B.R. 278 (Bankr. S.D. Ohio 2006) (“the ‘Hanging Paragraph’ of § 1325(a)”); In re Murray, 346 B.R. 237 (Bankr. M.D. Ga. 2006) (“§ 1325(a)(*)”); In re Wampler, 345 B.R. 730, 736–41 (Bankr. D. Kan. 2006) (“the 910 Language”); In re Shaw, 341 B.R. 543 (Bankr. M.D.N.C. 2006) (“the Hanging Paragraph”); In re DeSardi, 340 B.R. 790 (Bankr. S.D. Tex. 2006) (“the 910-paragraph”); In re Brown, 339 B.R. 818 (Bankr. S.D. Ga. 2006) (“the 910 Claims . . . in the unnumbered paragraph of § 1325”); In re Fleming, 339 B.R. 716 (Bankr. E.D. Mo. 2006) (“the 910 Day Car Language”); In re Carver, 338 B.R. 521 (Bankr. S.D. Ga. 2006) (“the Hanging Paragraph”); In re Ezell, 338 B.R. 330, 340 (Bankr. E.D. Tenn. 2006) (“Revised § 1325(a)(5) . . . the Anti-Cramdown Paragraph.”); In re Johnson, 337 B.R. 269 (Bankr. M.D.N.C. 2006) (“§ 1325(a)(9)”).

 

3  H.R. Rep. No. 109-31, at 72 (Apr. 8, 2005).

 

4  11 U.S.C. § 1325(a)(5) (emphasis added).

 

5  11 U.S.C. § 506(a)(1), discussed beginning at § 76.1  Valuation, Claim Splitting and Dewsnup.

 

6  See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

7  See 11 U.S.C. § 506(a)(2), discussed in § 450.1 [ New Valuation Standards ] § 76.7  Valuation after BAPCPA.

 

8  11 U.S.C. § 506(b), discussed in § 116.1 [ Oversecured Claim Holders ] § 78.5  Oversecured Claim Holders.

 

9  See, e.g., In re Leath, 389 B.R. 494, 498–99 (Bankr. E.D. Tex. 2008) (Parker) (When hanging sentence at the end of § 1325(a) applies, § 506(b) is not available, oversecured claim holder cannot add postpetition interest to its claim and claim receives present value interest only after confirmation. “[T]he general rule . . . is that the accrual of interest ceases as of the date of the filing of the bankruptcy petition. . . . [T]he exclusion of post-petition interest in the composition of an allowed claim is . . . overtly stated in § 502(b)(2) . . . . [I]n the absence of an applicable exception, the payment of post-petition interest as a component of an allowed claim is statutorily precluded. While the Claimants under different circumstances might have invoked the exception provided in § 506(b) for the payment of post-petition interest to an oversecured creditor, that exception was rendered unavailable to the Claimants in this instance because the Plan as confirmed applied the provisions of § 1325(a)(*) to these claims, thereby precluding any reference to § 506 in its entirety. As a result, while the invocation of § 1325(a)(*) protected these claims from bifurcation under § 506(a), its broad prohibition also had an unintended negative consequence as to these Claimants—it preempted any application of § 506(b) to these claims, thereby eliminating any right that these Claimants might have otherwise possessed to the payment of post-petition, preconfirmation interest on these claims.”); In re Lucier, No. 07-30658, 2007 WL 4868323, at *3 (Bankr. D.N.D. Dec. 5, 2007) (unpublished) (Hill) (Because § 506 does not apply, oversecured car lender is not entitled to attorney fees. “CPAC next objects to the amended Chapter 13 plan because it fails to provide for CPAC’s attorney fees. Section 506(b) allows creditors to obtain attorney fees if the creditor is oversecured. Although CPAC is oversecured, the hanging paragraph of section 1325(a)(9) provides that section 506 shall not apply to a 910 creditor such as CPAC.”).

 

10  11 U.S.C. § 1325(a)(5)(B)(ii).

 

11  See discussion of present value interest beginning at § 77.1  “Value, As of the Effective Date of the Plan” Means Interest.

 

12  See below in this section.

 

13  See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?. See also §§ 102.1 [ Surrender or Sale of Collateral ] § 74.5  Surrender or Sale of Collateral before BAPCPA and 446.1 [ Surrender of Collateral ] § 74.6  Surrender, Sale, Vesting in Lienholder and Payment with Property after BAPCPA.

 

14  See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

15  See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

16  11 U.S.C. § 1325(a)(5)(B)(iii)(II), discussed in § 449.1 [ “Adequate Protection” after Confirmation ] § 74.15  “Adequate Protection” after Confirmation after BAPCPA.

 

17  See § 447.1 [ Lien Retention, Including in No-Discharge Cases ] § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases.

 

18  See § 450.1 [ New Valuation Standards ] § 76.7  Valuation after BAPCPA.

 

19  This is a species of the phenomenon that “any value” will protect a real estate mortgage from modification, discussed in § 128.1 [ Modification of Unsecured Home Mortgage: Before and After BAPCPA ] § 80.13  Modification of Unsecured Home Mortgage: Before and After BAPCPA.

 

20  See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

21  See 11 U.S.C. § 1322(b)(1), discussed in § 462.1 [ 910-Day PMSI Car Claims: A Reprise ] § 87.7  910-Day PMSI Car Claims after BAPCPA: A Reprise.

 

22  541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). But see In re Franklin-Kidwell, No. 08-90911, 2008 WL 4516299, at *2 (Bankr. C.D. Ill. Sept. 9, 2008) (Fines) (910-day PMSI car claim must be treated as fully secured, and because § 506 does not apply, debt must be paid with contract interest. “[T]he Court finds that the Seventh Circuit has definitively ruled . . . in In re Wright, 492 F.3d 829 ([7th Cir. ]2007), . . . that the ‘hanging paragraph,’ under 11 U.S.C. § 1325(a), knocks out the application of 11 U.S.C. § 506, and, as such, leaves the parties to their contractual entitlements. . . . [T]o obtain confirmation . . . the Debtor will have to propose a plan which pays Marketview Motors, Inc. under the terms of the original contract[.]”); In re Brei, No. 4:07-BK-01354-JMM, 2007 WL 4104884, at *2 (Bankr. D. Ariz. Nov. 14, 2007) (unpublished) (Marlar) (“The interest rate to be paid to the Bank is the contract rate, because since the debt may not be crammed down, neither can the interest rate be modified.”).

 

23  341 B.R. 543 (Bankr. M.D.N.C. 2006).

 

24  341 B.R. at 546–47. Accord Wells Fargo Fin. Acceptance v. Price (In re Price), No. 08-1022, 2009 WL 975796, at *3 (4th Cir. Apr. 13, 2009) (Wilkinson, King, Gregory) (“The effect of the hanging paragraph is to prevent the bifurcation of certain secured claims when confirming a debtor’s plan under Section 1325(a)(5).”); Shaw v. Aurgroup Fin. Credit Union, 552 F.3d 447, 455–61 (6th Cir. 2009) (Boggs, Merritt, Griffin) (Hanging sentence is mandatory: Plan that crams down car claim is inconsistent with hanging sentence, and bankruptcy court has no discretion to confirm over objection of car lender. Debtor conceded that plan did not satisfy hanging sentence but argued that § 1325(a) was discretionary and that plan could be confirmed over car lender’s objection if fair and equitable. “[W]e have consistently treated the provisions in § 1325(a) as mandatory requirements for confirmation. . . . Our construction of § 1325(a) as imposing mandatory requirements for plan confirmation is consistent with several Supreme Court decisions suggesting the same. . . . We . . . hold that the conditions set forth in § 1325(a) are requirements the debtor must satisfy to qualify a Chapter 13 plan for confirmation. As a result, when a secured creditor objects to confirmation because the plan does not comply with § 1325(a)(5)—as is the case here—the bankruptcy court may not confirm the plan unless it meets the requirements of that subsection. . . . Because Shaw conceded that her proposed plan did not comply with the hanging paragraph following § 1325(a), the bankruptcy court could not, as a matter of law, confirm the plan.”); DaimlerChrysler Fin. Servs. Ams. LLC v. Barrett (In re Barrett), 543 F.3d 1239 (11th Cir. 2008) (Tjoflat, Marcus, Vinson) (Claim secured by a 910 vehicle cannot be bifurcated at confirmation because § 506 does not apply.); Nuvell Fin. Servs. Corp. v. Dean (In re Dean), 537 F.3d 1315 (11th Cir. 2008) (Tjoflat, Marcus, Vinson) (Reversing line of decisions that began with In re Carver, 338 B.R. 521 (Bankr. S.D. Ga. 2006), 910-day PMSI car claims are fully secured and entitled to present value interest when debtor retains collateral and makes installment payments through plan.); Wachovia Dealer Servs. v. Jones (In re Jones), 530 F.3d 1284, 1289 (10th Cir. 2008) (Henry, Tacha, Lucero) (Citing DaimlerChrysler Financial Services Americas, LLC v. Ballard (In re Ballard), 526 F.3d 634 (10th Cir. 2008), 910-day PMSI car claim must be paid in full; court reserves question whether appropriate interest rate is Till. “[B]ecause a 910 car claim is not subject to bifurcation under § 506(a), the holder of such a claim is entitled to the present value of the entire claim under § 1325(a)(5)(B)(ii).”); In re Quick, 371 B.R. 459, 462 (B.A.P. 10th Cir. 2007) (“[T]he § 506 bifurcation process is no longer applicable to ‘910 debts.’ As such, a debtor can no longer ‘cram down’ a 910 debt and, instead, must pay the entire amount owed to the creditor in order to retain 910 collateral.”), rev’d on other grounds sub nom. DaimlerChrysler Fin. Servs. Ams. LLC v. Ballard (In re Ballard), 526 F.3d 634 (10th Cir. 2008) (Tacha, Ebel, McConnell); Drive Fin. Servs. v. Jordan (In re Jordan), 521 F.3d 343, 347–50 (5th Cir. 2008) (Garwood, Garza, Benavides) (Hanging sentence prohibits bifurcation of 910-day PMSI car claims; BAPCPA did not change rule announced in Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), that secured claim holders at cramdown in Chapter 13 cases are entitled to present value interest at prime rate plus a risk factor. On direct appeal, Fifth Circuit rejects creditor’s argument that absence of plurality decision in Till reinvigorates contract rate rule announced by Fifth Circuit in Green Tree Financial Servicing Corp. v. Smithwick, 121 F.3d 211 (5th Cir. 1997). “Drive Financial argues that since the hanging paragraph makes section 506 inapplicable to its claim, the Supreme Court’s opinion in Till is distinguishable because it dealt with a lien-stripped claim . . . . This argument is unpersuasive because Till did not rely upon the fact that the creditor’s claim had been bifurcated using section 506. . . . Since we are presented with facts indistinguishable from Till, we need not attempt to divine a narrowest grounds . . . . We are bound by stare decisis to apply the holding of Till by rejecting the creditor’s challenge to the bankruptcy court’s use of the prime-plus interest rate.”); AmeriCredit Fin. Servs., Inc. v. Long (In re Long), 519 F.3d 288, 294 (6th Cir. 2008) (Merritt, Clay, Cox) (“Without § 506, creditors falling within the scope of the hanging paragraph are fully secured so that when a debtor elects to retain the collateral, the debtor must propose a plan that will pay the full amount of the claim.”); Capital One Auto Fin. v. Osborn (In re Osborn), 515 F.3d 817, 820–21 (8th Cir. 2008) (Wollman, Benton, Doty) (“BAPCPA eliminated the cram down option for cars purchased less than 910 days before the Chapter 13 bankruptcy . . . . By the plain language of the hanging paragraph, § 506 does not apply to a 910-claim. Therefore, . . . the claim is considered secured because it is secured according to state law.”); Community Am. Credit Union v. Griffin (In re Gallagher), Nos. KS-07-051, 06-22047, 2007 WL 2745808, at *2 (B.A.P. 10th Cir. Sept. 21, 2007) (unpublished) (“[A] debtor must pay the full amount of the claim, plus interest at the ‘prime-plus’ rate prescribed by [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)] . . . . The existence of a claim is usually determined by non-bankruptcy substantive law, whereas valuation of that claim is determined by § 506.”); DaimlerChrysler Fin. Servs. N. Am. LLC v. Griffin (In re Wilson), 374 B.R. 251, 255–56 (B.A.P. 10th Cir. 2007) (910-day PMSI car claim must be paid in full with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest. “[T]he phrase may be parsed into two terms, an ‘allowed claim’ (meaning no objection to the claim has been asserted or has been overruled under § 502(b)) and a ‘secured claim’ under nonbankruptcy law (i.e., a claim secured by a ‘lien’ as defined in § 101(37)). Thus, a claim may be an ‘allowed secured claim’ without reference to the valuation process of § 506.”); Ford Motor Credit Co. v. Robertson, 396 B.R. 672 (S.D. W. Va. 2008) (Faber) (Hanging sentence does not render a 910-day PMSI car claim unsecured; car lender is entitled to Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest without regard to contract rate.); In re Sparks, No. 1:06-cv670, 2007 WL 2080289, at *4 (S.D. Ohio July 18, 2007) (unpublished) (Hanging sentence at end of § 1325(a) creates a mandatory condition for confirmation; bankruptcy court correctly determined it did not have discretion to confirm plan that crammed down 910-day PMSI car claim. “If Congress had intended for there to be an option for the Bankruptcy Court to confirm a plan that did not meet the requirements set forth in § 1325(a), it would have clearly set forth that in the statute.”), aff’g 346 B.R. 767, 771–72 (Bankr. S.D. Ohio 2006) (910-day PMSI car claim cannot be crammed down, but if debtor keeps car, appropriate interest rate on entire debt is prime plus a risk factor under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “[T]he provisions of § 1325(a) are mandatory and where the debt meets the parameters of the hanging paragraph, the Debtors are prevented from cramming down the secured debt . . . . [I]nterest on the debt is to be calculated pursuant to the Supreme Court’s decision in Till.”); Horr v. Jake Sweeney Smartmart, Inc., No. 1:07-CV-00010, 2007 WL 1989611 (S.D. Ohio July 6, 2007) (unpublished) (Hanging sentence at the end of § 1325(a) is mandatory and precludes confirmation of plan that crams down a 910-day PMSI car claim.); In re Morris, 370 B.R. 796 (E.D. Wis. 2007) (910-day PMSI car claim is treated as fully secured because state law and the contract determine that lienholder has an allowed secured claim; 910-day PMSI car claim is entitled to postconfirmation interest based on Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); Citifinancial Auto v. Hernandez-Simpson (In re Hernandez-Simpson), 369 B.R. 36 (D. Kan. 2007) (Rejecting In re Wampler, 345 B.R. 730 (Bankr. D. Kan. 2006), and adopting majority view, 910-day PMSI car claim cannot be bifurcated and must be paid in full with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest.); In re Garner, 399 B.R. 267, 272–73 (Bankr. D. Utah 2009) (Thurman) (Citing In re Montoya, 341 B.R. 41 (Bankr. D. Utah 2006), and distinguishing Wachovia Dealer Services v. Jones (In re Jones), 530 F.3d 1284 (10th Cir. 2008), plan that crams down 910-day PMSI car claim in violation of hanging sentence cannot be confirmed notwithstanding absence of objection from car lender. “[T]he requirements of § 1325(a) are ‘clearly mandatory’ and the debtor must satisfy them ‘to qualify for a Chapter 13 plan confirmation.’ . . . Montoya remains good law and its interpretation of the interplay between the anti-bifurcation provisions of the hanging paragraph and § 1325(a)(5)(A) is particularly instructive. . . . [T]he Court has an independent duty to review the Plan to ensure that it complies with the requirements of § 1325(a), including the anti-bifurcation provision of the hanging paragraph. . . . Simply because a creditor fails to object to the Plan’s treatment of its claim does not allow the Debtors to disregard the explicit language in the statute prohibiting such treatment. . . . There may be instances where a creditor’s silence constitutes acceptance of some matters under the Bankruptcy Code. The Court, however, is of the opinion that bifurcation of 910-day vehicle claims, as the Debtors propose here, is not one of those instances.”); In re Hoskings, No. 07-13785-RGM, 2008 WL 2235350, at *7 (Bankr. E.D. Va. May 29, 2008) (Mayer) (“[A] general consensus has emerged that the hanging paragraph prohibits the cramdown of a plan that bifurcates a claim governed by the hanging paragraph.”); In re Vandernick, Nos. 07-1068, 07-1192, 07-1024, 2008 WL 901685 (Bankr. N.D. W. Va. Mar. 31, 2008) (Flatley) (Hanging sentence prevents bifurcation of 910-day PMSI car claim but does not destroy its character as a secured claim; plan can modify other rights of 910-day PMSI car claim holder but must pay postconfirmation present value interest at prime-plus rate mandated by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Bethoney, 384 B.R. 24 (Bankr. D. Mass. 2008) (Hillman) (Claim that falls within hanging sentence at the end of § 1325(a) cannot be bifurcated notwithstanding absence of objection from lienholder.); In re Lorenz, 368 B.R. 476 (Bankr. E.D. Va. 2007) (Claim subject to “hanging paragraph” is secured in full amount of claim.); In re Adaway, 367 B.R. 571, 574 (Bankr. E.D. Tex. 2007) (“By eliminating access to the bifurcation provisions of § 506(a), the allowed amount of a claim which falls within the realm of protection offered by § 1325(a)(*) must be paid in its entirety.”); In re Phillips, 362 B.R. 284, 307 (Bankr. E.D. Va. 2007) (A 910-day PMSI car claim must be paid in full with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest. “[C]laims that are subject to the ‘hanging paragraph’ will be paid as secured claims, in the full amount of the claim. . . . This Court agrees with reasoning in [In re Shaw, 341 B.R. 543 (Bankr. M.D.N.C. 2006),] and holds that claims subject to the provisions of the ‘hanging paragraph’ are required to be paid with interest at a rate consistent with the holding of Till.”); In re Brei, No. 4:07-BK-01354-JMM, 2007 WL 4104884, at *2 (Bankr. D. Ariz. Nov. 14, 2007) (unpublished) (Marlar) (“As a purchase money transaction for a vehicle acquired within 910 days of the bankruptcy filing, the Vehicle may not be ‘crammed down’ to its actual value. The Debtor must pay the entire balance, in her plan, as a secured obligation. The interest rate to be paid to the Bank is the contract rate, because since the debt may not be crammed down, neither can the interest rate be modified. Moreover, no evidence was presented to show why the 10% contract rate was unreasonable or ‘not a market rate’ for this particular Debtor with this degree of ‘risk.’”); In re Beasley, No. 07-40280 JTL, 2007 WL 2986124, at *1 (Bankr. M.D. Ga. Oct. 9, 2007) (unpublished) (“This Court has held, along with the majority of courts considering the section, that the hanging paragraph . . . simply has the effect of precluding debtors from bifurcating certain undersecured claims using § 506.”); In re Thomas, No. 06-21363, 2007 WL 2462664 (Bankr. D. Kan. Aug. 27, 2007) (unpublished) (Rejecting In re Wampler, 345 B.R. 730 (Bankr. D. Kan. 2006): “Both the Tenth Circuit Bankruptcy Appellate Panel, in [DaimlerChrysler Financial Services North America, LLC v. Griffin (In re Wilson), 374 B.R. 251 (B.A.P. 10th Cir. 2007),] and the Kansas District Court in [Citifinancial Auto v. Hernandez-Simpson, 369 B.R. 36 (D. Kan. 2007),] have held that when a debtor elects to retain collateral securing a 910-claim, the creditor’s claim should be treated as a secured claim for the full amount of the loan balance as of the date of the petition and that § 1325(a)(5)(B)(ii) requires the debtor to pay interest at the [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] rate on the allowed secured claim over the life of the plan.”); In re Williams, No. 06-32921-KRH, 2007 WL 2122131, at *3 (Bankr. E.D. Va. July 19, 2007) (unpublished) (“This Court is in agreement with the majority view that the effect of the hanging paragraph is to require treatment of a 910 claim as fully secured.”); Regional Acceptance Corp. v. Williams (In re Williams), Nos. 06-80695 13, 06- 09024, 2007 WL 128891, at *5 (Bankr. M.D.N.C. Jan. 12, 2007) (unpublished) (“[C]ourts in this district have now clearly established, a debtor may no longer modify a secured creditor’s 910 claim in a Chapter 13 plan pursuant to § 1325(a)(5)(B). . . . [A] secured creditor may expect that if it has a 910 claim, it will be treated as if fully secured.”); In re McCormick, No. 06-23358-SVK, 2006 WL 3499226 (Bankr. E.D. Wis. Dec. 5, 2006) (unpublished) (910-day PMSI car claim must be treated as fully secured and paid present value through plan; prime rate is starting point and because AmeriCredit produced no evidence of a risk factor, no risk adjustment is warranted.); In re Henry, 353 B.R. 261 (Bankr. D. Or. 2006) (Rejecting In re Wampler, 345 B.R. 730 (Bankr. D. Kan. 2006), and In re Carver, 338 B.R. 521 (Bankr. S.D. Ga. 2006), and embracing In re Brown, 339 B.R. 818 (Bankr. S.D. Ga. 2006), and In re Brooks, 344 B.R. 417 (Bankr. E.D.N.C. 2006), a 910-day PMSI car claim is an allowed secured claim that must be paid in full with present value governed by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Trejos, 352 B.R. 249 (Bankr. D. Nev. 2006) (Because secured claim arises other than under § 506(a), hanging sentence at end of § 1325(a) applies to car lien; debtor cannot bifurcate or strip down allowed amount of car lender’s claim; debtor can pay present value of allowed claim with interest under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Ross, 355 B.R. 53 (Bankr. W.D. Tenn. 2006) (Plan cannot strip down 910-day PMSI car claim, and BAPCPA did not abrogate Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004); 0% contract that is modified by plan must be paid with prime plus risk factor interest.); In re White, 352 B.R. 633 (Bankr. E.D. La. 2006) (Secured portion of 910-day PMSI car claim is entire purchase money portion of debt, but interest is payable at Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), formula rate only on principal portion, not on accrued prepetition interest charges.); In re Nicely, 349 B.R. 600 (Bankr. W.D. Mo. 2006) (910-day PMSI car claim is secured for full amount of debt.); In re Turner, 349 B.R. 437, 442 (Bankr. D.S.C. 2006) (Adopting majority interpretation, “the flush language of § 1325(a) prevents a Chapter 13 debtor from ‘stripping down’ purchase money security interests in automobiles acquired for a debtor’s personal use within the 910-day period preceding that debtor’s bankruptcy filing. . . . [S]ecured creditors subject to the flush anguage of § 1325(a) are fully secured for the entire amount of their claims and must be repaid in full through a Chapter 13 plan if debtors wish to retain the collateral securing the claim.”); In re Osborn, 348 B.R. 500, 505 (Bankr. W.D. Mo. 2006) (“[T]he plain language of § 1325(a)(5) and the hanging paragraph mandate that . . . a secured creditor of the kind described in the hanging paragraph has a secured claim for the full amount due as of the date of the filing of the petition.”); In re Rowley, 348 B.R. 479 (Bankr. S.D. Ill. 2006) (Debt that meets four requirements in hanging sentence at end of § 1325(a) cannot be stripped down to the value of collateral notwithstanding that there is no equity in collateral.); In re Brown, 346 B.R. 868, 876 (Bankr. N.D. Fla. 2006) (“Under § 1325(a)(5) . . . a creditor who holds a secured claim that is within the scope of the Hanging Paragraph is fully secured up to the entire amount of the debt owed to it. If the debtor chooses to retain the collateral under Section 1325(a)(5)(B), the Hanging Paragraph requires the debtor to treat the entire amount of the debt as secured and pay the full amount of the claim as secured over the life of the plan.”); In re Brown, 346 B.R. 246 (Bankr. M.D. Ga. 2006) (Adopting In re Murray, 346 B.R. 237 (Bankr. M.D. Ga. 2006), 910-day PMSI car claim is fully secured and must be paid in full with interest if the debtor wants to retain the car; present value interest is determined under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Murray, 346 B.R. 237, 242–45 (Bankr. M.D. Ga. 2006) (910-day PMSI car lender has a fully secured claim that must be paid in full with interest under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “[T]he Court agrees with the reasoning and conclusion set forth in [In re Brown, 339 B.R. 818 (Bankr. S.D. Ga. 2006),] . . . that it is unnecessary and inappropriate to ‘contort’ § 506(a) into a definitional provision where other sections of the Code address whether a claim is ‘allowed’ and/or ‘secured.’ . . . [Section] 1325(a)(*) serves only to prevent the bifurcation of an allowed secured claim under § 506 . . . . [A] claim qualifying under § 1325(a)(*) may be considered an ‘allowed secured claim’ for purposes of § 1325 and would be, therefore, subject to the present [value] interest requirement of § 1325(a)(5). . . . No provision of BAPCPA prohibits the modification of secured creditors’ rights under § 1322(b)(2). . . . Till, with its mandate regarding the payment of post-petition interest, is not abrogated. Secured claims qualifying under § 1325(a)(*) shall be paid at the interest rate set forth in Till so as to satisfy the present value requirement of § 1325(a)(5).”); In re Duke, 345 B.R. 806 (Bankr. W.D. Ky. 2006) (Hanging sentence at the end of § 1325(a) prohibits bifurcation of a 910-day PMSI car claim.); In re Lowder, No. 05-44802, 2006 WL 1794737, at *6 (Bankr. D. Kan. June 28, 2006) (unpublished) (Car claim falling within hanging sentence in § 1325(a) must be paid in full with present value interest under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “This Court . . . adopts the position taken by the majority of courts . . . that the hanging paragraph in § 1325(a) does not render a creditor, secured by operation of state law, into some undefined other type of creditor. The purchase money claim remains secured, despite the inapplicability of the valuation mechanism contained in § 506. . . . Debtor . . . must comply with the unchanged requirement to provide present value . . . which result is mandated by § 1325(a)(5)(B)(ii), . . . to be paid with interest at the Till rate.”); In re Vega, 344 B.R. 616, 621 (Bankr. D. Kan. 2006) (“[T]his Court cannot confirm a plan that attempts to cram down the claim of a creditor that extended credit to a debtor for the express purpose of purchasing a vehicle for debtor’s personal use when that purchase occurred within two and one-half years of the date of the filing.”); In re Soards, 344 B.R. 829, 831–32 (Bankr. W.D. Ky. 2006) (910-day PMSI car claim with contract interest below prime cannot be bifurcated and is entitled to discount rate at confirmation consistent with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “The language of 11 U.S.C. § 1325(b)(5)(B)(ii) was unchanged by BAPCPA and the Supreme Court’s interpretation of this language in Till is still valid. . . . [W]here the plan proposes to pay the secured claim in installments over time, the Till rate of interest must be added to the payment to arrive at the present value of the claim and the contract rate of interest is irrelevant to this analysis. . . . The Court notes . . . that the Plan may provide for direct payments to Ford in accordance with the terms of the contract and in such as case, Ford must live with the contract rate of interest, no matter how low it is.”); In re Brooks, 344 B.R. 417, 421–22 (Bankr. E.D.N.C. 2006) (910-day PMSI car claim is secured for the full amount of the debt and cannot be bifurcated; claim can be modified and paid in full with present value interest consistent with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “[A] 910 claim may be an ‘allowed secured claim’ for the purposes of § 1325(a)(5), regardless of the inapplicability of § 506. . . . [A]s 910 claims are not subject to the valuation requirement of § 506, such claims cannot be bifurcated. Instead, a 910 claim ‘is allowed in the amount of the balance owed as of the petition date.’ . . . As the hanging paragraph does not prevent the application of § 1322(b)(2) to 910 claims . . . interest on such claims does not have to be calculated at the contract rate. . . . This district has adopted the prime-plus rate used in Till to calculate interest on a secured claim pursuant to § 1325(a)(5)(B)(ii). Till has not been abrogated by BAPCPA and it is the appropriate rate of interest to apply to 910 claims.”); In re Bufford, 343 B.R. 827, 831–36 (Bankr. N.D. Tex. 2006) (910-day PMSI car claim cannot be bifurcated but can be paid with present value interest consistent with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “[T]he drafters of the 910-day provision intended to eliminate the ability of debtors to bifurcate, or ‘strip down’ secured claims on these recently purchased vehicles. . . . A claim is determined to be ‘allowed’ or not pursuant to § 502 of the Code, and is determined to be either ‘secured’ or not pursuant to state law. . . . Eliminating the use of § 506 does not eliminate a creditor’s secured claim. . . . It does not make § 1325 or any Code provision, other that [sic] § 506, inapplicable . . . . It does not alter the present value requirement of § 1325(a)(5)(B)(ii), or the ability to modify a secured car creditor’s rights under § 1322(b)(2). . . . While § 506(a) can no longer be used to bifurcate 910-day car claims into a secured claim and an unsecured claim and the creditor must be given a secured claim for the entire amount remaining to be paid under the contract loan documents as of the petition date, that claim cannot include the unmatured interest called for under the loan documents, pursuant to § 502(b)(2). . . . Congress did not give any indication in drafting the 910-day provision that it intended to overrule Till. . . . Congress . . . neither amended § 1322(b), nor amended § 1325(a)(5) to provide that interest on claims subject to 910-day provision be paid at the contract rate or any other rate.”); In re Parish, No. 05-BK-15702-JAF, 2006 WL 1679710, at *1–*2 (Bankr. M.D. Fla. May 12, 2006) (unpublished) (910-day PMSI car claim cannot be bifurcated and entire claim must be paid in full through the plan; modification under § 1322(b)(2) is still available. “[S]ection 506 is now inapplicable in two scenarios. First, if a creditor (1) has a purchase money security interest . . . (2) the collateral for which consists of a motor vehicle . . . acquired for the personal use of the debtor, and (3) the debt was incurred within the 910-day period preceding the date of the filing of the petition, then section 506 is inapplicable and the entire amount of the creditor’s claim is secured. . . . The second scenario where section 506 does not apply is where a creditor (1) has a purchase money security interest securing a debt, (2) the collateral for that debt consists of anything of value (other than a motor vehicle), and (3) the debt was incurred during the 1-year period preceding the filing. In each of the two aforementioned scenarios, a secured creditor’s claim is fully secured irrespective of the value of the collateral securing the debt. . . . [A]lthough the Amendment proscribes the application of section 506 . . . the Amendment does not preclude the applicability of section 1322(b)(2), which affords a debtor the ability to modify a secured claim . . . to change the interest rate, change the number of payments and change the amount of payments.”); In re Scruggs, 342 B.R. 571, 575 (Bankr. E.D. Ark. 2006) (Rejecting In re Carver, 338 B.R. 521 (Bankr. S.D. Ga. 2006), 910-day PMSI car claim is secured claim that must be paid in full regardless of value of collateral; Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), determines discount rate notwithstanding 0% contract rate. “[T]he amendments contained in BAPCPA did not overrule the Till decision, and that case is still binding precedent for establishing the proper interest rate even in cases where the creditor’s debt is secured by a ‘910’ vehicle.”); In re Montgomery, 341 B.R. 843, 845 (Bankr. E.D. Ky. 2006) (Hanging sentence at the end of § 1325(a) prohibits bifurcation and cramdown “even where the lender failed to object to the debtor’s proposed plan.”); In re Montoya, 341 B.R. 41, 44 (Bankr. D. Utah 2006) (“The majority of courts interpreting the hanging paragraph hold that it precludes a Chapter 13 debtor from using § 506 to cram down a 910-day vehicle. This Court agrees with the majority.”); In re DeSardi, 340 B.R. 790, 812–14 (Bankr. S.D. Tex. 2006) (Applying the “plain meaning” of “secured,” 910-day PMSI car claims that fall within the hanging sentence at the end of § 1325(a)(5) are secured claims for purposes of § 1325(a)(5) that cannot be stripped down; Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), still defines the appropriate interest rate at confirmation. “This Court does not agree with the conclusion in [In re Carver, 338 B.R. 521 (Bankr. S.D. Ga. 2006)]. . . . Section 1325(a)(5) applies to ‘allowed secured claims.’ Secured claims are generally defined by § 506. Section 506 does not apply to 910-paragraph claims. . . . The effect of the 910-paragraph is not to make the claims not ‘secured.’ Rather, it is to remove the § 506 definition of ‘secured’ from being applicable in § 1325. Accordingly, the Court will apply the plain meaning of ‘secured’—rather than the Bankruptcy Code’s § 506 definition of ‘secured’—to § 1325. . . . [R]eliance on Texas law makes each of the lenders’ claims in these three cases ‘secured’ for the purposes of § 1325. While the 910-paragraph cited above has limited the ability of debtors to strip down certain claims, nowhere does it (or its legislative history) limit the ability to adjust the interest rate associated with vehicle liens. . . . Congress had plentiful opportunity to overturn or constrain Till in its recent BAPCPA amendments. . . . [T]his Court will continue to apply the Till rate in appropriate cases.”); In re Brown, 339 B.R. 818, 821–22 (Bankr. S.D. Ga. 2006) (Citing Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992), and 11 U.S.C. § 101(37), “910 creditors” are fully secured but the interest rate can be modified consistent with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “The Dewsnup established relationship between § 506(a) and ‘allowed secured claim’ in § 506(d) also applies to the relationship between § 506(a) and ‘allowed secured claim’ in § 1325(a)(5) permitting bifurcation of an allowed claim under § 506(a) into secured and unsecured portions in contravention of nonbankruptcy law . . . . Because the 910 Claims are ‘allowed’ under § 502 and ‘secured’ by recourse to underlying collateral, they are ‘allowed secured claim[s]’ as contemplated by § 1325(a)(5). The 910 Claims are thus included in the present value requirement of § 1325(a)(5)(B)(ii). . .  [T]he phrase ‘section 506 shall not apply’ as it is used in the unnumbered paragraph of § 1325 means only that the claims described cannot be bifurcated. . . . However, no provision of BAPCPA prohibits the modification of secured creditors’ rights under § 1322(b)(2). Consequently, while the 910 Creditors are entitled to fully secured claims, the applicable interest rate necessary to meet the present value requirement of § 1325(a)(5)(B)(ii) is governed by Till.”); In re Fleming, 339 B.R. 716, 722–23 (Bankr. E.D. Mo. 2006) (910-day PMSI car claim cannot be crammed down because of hanging sentence at end of § 1325(a); however, claim can be modified and paid present value interest under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “The 910 Day Car Language prevents a debtor from cramming down the value of the Car Creditors’ claims. Instead, each Car Creditor’s secured claim is allowed in the amount of the balance owed as of the petition date. The value of the collateral is irrelevant in determining the allowed amount of the secured claim. . . . Each of these debtors has selected to retain the vehicle and therefore must provide the Car Creditor with lien retention and a stream of monthly payments equal to present value, in equal monthly amounts, and sufficient to provide adequate protection. . . . The 910 Day Car Language has no impact on the requirement to pay present value set forth in § 1325(a)(5)(B)(ii) other than to clarify the dollar amount of the claim which must receive present value. . . . Till still controls what interest rate is required to ensure present value under § 1325(a)(5)(B)(ii). . . . [T]he Car Creditor’s secured claim does not include post-petition interest. The Chapter 13 plan need only provide the Car Creditor with the amount of its secured claim—which excludes post-petition interest.”); In re Wright, 338 B.R. 917, 919–20 (Bankr. M.D. Ala. 2006) (910-day PMSI car claim cannot be stripped down to value of collateral, but fully secured claim can be modified; Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), was not abrogated by BAPCPA. 910-day PMSI car creditors “must be treated as fully secured under the plan. However, this restriction on bifurcation does not protect these creditors from modification of other contractual rights. . . . Had Congress intended to create a complete safe harbor for the automobile lender with a purchase-money security interest, it could have expressly done so, but it did not. . . . The only complete safe harbor from any modification is that provided to home mortgagees under 11 U.S.C. § 1322(b)(2).”); In re Ezell, 338 B.R. 330, 340 (Bankr. E.D. Tenn. 2006) (“[W]hen the creditor files its claim as secured, the Anti-Cramdown Paragraph precludes the use of Revised § 506(a) to reduce or bifurcate that claim into secured and unsecured components. . . . [T]he creditor’s allowed secured claim is fixed at the amount at which the claim is filed. . . . Accordingly, under Revised § 1325(a)(5), a creditor holding a secured claim falling within the scope of the Anti-Cramdown Paragraph is fully secured for the amount of its claim . . . . If the property is to be retained pursuant to Revised § 1325(a)(5), the debtor must treat the entire claim as secured.”); In re Robinson, 338 B.R. 70, 73–75 (Bankr. W.D. Mo. 2006) (Debtor cannot bifurcate 910-day PMSI car claim, but § 1322(b)(2) permits modification, and discount rate is determined by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “[B]ecause the creditors’ claims are secured by motor vehicles acquired for the Debtor’s personal use within 910 days prior to her bankruptcy filing, § 506 does not apply . . . . [T]hese creditors are entitled to secured claims for the total amount of their claims, regardless of the value of the respective vehicles, and the Debtor cannot bifurcate them. . . . Just as Congress previously provided that the terms of home mortgages cannot be modified in a Chapter 13 plan, it could have in BAPCPA provided the same for car loans. But Congress did not modify § 1322(b)(2) . . . . Nowhere does the [House Report] mention an amendment relating to interest rates or Till. . . . [T]he BAPCPA amendments did not overrule Till. Such amendments do require this Debtor to pay the full amount of these creditors’ claims over the course of the Chapter 13 Plan. However, debtors continue to be permitted under § 1322(b)(2) to modify the rights of secured creditors.”); In re Johnson, 337 B.R. 269, 272 (Bankr. M.D.N.C. 2006) (“[D]ebtors may not bifurcate the claims of lenders with purchase money security interests in vehicles purchased within 910 days of bankruptcy for the debtor’s personal use. Such a creditor is entitled to the full payment of his contractual claim or to the return of the vehicle.”).

 

25  This same mistake characterizes the debate whether a Chapter 13 plan can surrender a 910-day PMSI car in full satisfaction of the debt. See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

26  See, e.g., In re Harrison, 394 B.R. 879, 883 (Bankr. N.D. Ill. 2008) (Squires) (Plan can modify 910-day PMSI car contract. “Debtors are therefore allowed to alter the terms of the Contract under the Modified Plan during its term because nothing in § 1325(a) trumps or overrides § 1322(b)(2). The Debtors have the right to modify the terms of the Contract pursuant to § 1322(b)(2) and the interest rate provided by the Debtors is appropriate under [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),]’s formula approach.”); In re Vandernick, Nos. 07-1068, 07-1192, 07-1024, 2008 WL 901685 (Bankr. N.D. W. Va. Mar. 31, 2008) (Flatley) (Hanging sentence prevents bifurcation of 910-day PMSI car claim but plan can modify other rights of 910-day PMSI car claim holder, including postconfirmation present value interest rate.); In re Hopkins, 371 B.R. 324 (Bankr. N.D. Ill. 2007) (No provision of § 1325(a)(5) precludes modifying payment amount and interest rate on 910-day PMSI car claim.); In re Parish, No. 05-BK-15702-JAF, 2006 WL 1679710, at *2 (Bankr. M.D. Fla. May 12, 2006) (unpublished) (“[A]lthough the Amendment proscribes the application of section 506 . . . the Amendment does not preclude the applicability of section 1322(b)(2), which affords a debtor the ability to modify a secured claim . . . to change the interest rate, change the number of payments and change the amount of payments.”); In re Johnson, 337 B.R. 269, 273 (Bankr. M.D.N.C. 2006) (“[A] plan may still modify the term of the loan and the interest rate, even if bifurcation is not allowed.”).

 

27  See 11 U.S.C. § 1322(b)(2), discussed in § 118.1 [ Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman ] § 79.1  Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman.

 

28  See § 112.2 [ Present Value After Till ] § 77.3  Present Value after Till.

 

29  See 11 U.S.C. § 1325(a)(5)(B)(iii)(I), discussed in § 448.1 [ Equal Monthly Installments ] § 74.14  Equal Monthly Installments after BAPCPA.

 

30  See 11 U.S.C. § 1325(a)(5)(B)(iii)(II), discussed in § 449.1 [ “Adequate Protection” after Confirmation ] § 74.15  “Adequate Protection” after Confirmation after BAPCPA.

 

31  See 11 U.S.C. § 1325(a)(5)(B)(i), discussed in § 447.1 [ Lien Retention, Including in No-Discharge Cases ] § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases.

 

32  338 B.R. 521 (Bankr. S.D. Ga. 2006).

 

33  338 B.R. at 523–28. Accord In re Robinson, 355 B.R. 920 (Bankr. M.D. Ga. 2006); In re Green, 348 B.R. 601 (Bankr. M.D. Ga. 2006); In re Williams, No. 06-50556-JDW, 2006 WL 3703875 (Bankr. M.D. Ga. Sept. 12, 2006) (unpublished); In re Vail, No. 05-18114-JDW, 2006 WL 3703877 (Bankr. M.D. Ga. Sept. 12, 2006) (unpublished); In re Dean, No. 06-10223-JDW, 2006 WL 3703881 (Bankr. M.D. Ga. Sept. 12, 2006) (unpublished).

 

34  See Nuvell Fin. Servs. Corp. v. Dean (In re Dean), 537 F.3d 1315 (11th Cir. 2008) (Tjoflat, Marcus, Vinson).

 

35  345 B.R. 730 (Bankr. D. Kan. 2006).

 

36  344 B.R. 857 (Bankr. N.D. Ohio 2006).

 

37  345 B.R. at 736–41. Accord In re Kinsey, 368 B.R. 888, 892–95 (Bankr. D. Kan. 2007) (Defending In re Wampler, 345 B.R. 730 (Bankr. D. Kan. 2006), 910-day PMSI car claim is entitled to payment in full without interest. “Nowhere does the Code say a creditor may have an ‘allowed secured claim’ under § 1325(a)(5) without § 506(a). . . . To say that § 506(a) does not determine ‘allowed secured claim’ in § 1325(a)(5) ignores the Supreme Court cases holding to the contrary. . . . Because § 506 does not apply to 910 car claimants and because the only means by which creditors are entitled to an allowed secured claim is determined under § 506, those creditors cannot hold allowed secured claims and are not entitled to treatment under § 1325(a)(5). . . . State law may define and create property interests, but it is the function of the Code to determine claim treatment in bankruptcy. . . . The Hanging Paragraph does not alter the creditor’s prepetition lien, but provides for separate and distinct treatment of the allowed claim. As allowed, but not secured under the Code, 910 car claims may not include unmatured or, in this case, postpetition interest.”); In re Taranto, 344 B.R. 857, 861–62 (Bankr. N.D. Ohio 2006) (Accelerated payment in full with interest at contract rate of 0% satisfies undersecured 910-day PMSI car claim. DaimlerChrysler held claim of $28,222.66 secured by car valued at $16,706.11. Seventy-two-month contract called for interest at 0%. Plan provided for payment of full principal amount 45 months sooner than required by contract. “The challenge for courts seeking to interpret the 910 Provision is the ouroboros effect. For a claimant to have the benefits of § 1325(a)(5), it must hold an allowed secured claim. Under the Bankruptcy Code, one holds an allowed secured claim only through operation of § 506. The 910 Provision specifically excludes the application of § 506. . . . There is no evidence in the legislative history . . . that Congress intended that the 910 Claim, which, by the very operation of the 910 Provision, is not an ‘allowed secured claim,’ should also receive the present value protection provided for in § 1325(a)(5)(B)(ii) on the 910 Claim amount where the value of the collateral securing the 910 Claim is less than the amount of the 910 Claim. . . . That amount of the allowed claim is now a construct based on the 910 Provision’s prohibition against bifurcation, and is without regard to the value of the collateral. This artificial inflation of the amount of the 910 Claim reduces the risk exposure against which the Supreme Court was trying to protect pre-BAPCPA creditors in the cram down—strip down situation addressed in [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)]. To allow both inflation of the allowed amount of the claim and application of interest under Till ignores the economic realities of this case and perhaps the vast majority of 910 Claims. . . . [W]here the Plan proposes to pay a truly undersecured . . . 910 Creditor the entire face amount of the principal in a shorter time period than originally contemplated under the Contract, Till does not apply. . . . Requiring the payment of additional interest on DaimlerChrysler’s 910 Claim under a ‘prime plus’ calculation would produce an unjustified windfall to DaimlerChrysler at the expense of the Debtors’ unsecured creditors.”).

 

38  See Wachovia Dealer Servs. v. Jones (In re Jones), 530 F.3d 1284 (10th Cir. 2008) (Henry, Tacha, Lucero); DaimlerChrysler Fin. Servs. Ams. LLC v. Ballard (In re Ballard), 526 F.3d 634 (10th Cir. 2008) (Tacha, Ebel, McConnell).

 

39  See Shaw v. Aurgroup Fin. Credit Union, 552 F.3d 447 (6th Cir. 2009) (Boggs, Merritt, Griffin); AmeriCredit Fin. Servs., Inc. v. Long (In re Long), 519 F.3d 288 (6th Cir. 2008) (Merritt, Clay, Cox).

 

40  See § 451.3 [ Only PMSIs Need Apply ] § 75.3  Only PMSIs Need Apply.

 

41  See 49 U.S.C. § 30102, discussed in § 451.2 [ Motor Vehicles and Any Other Thing of Value ] § 75.2  Motor Vehicles and Any Other Thing of Value.

 

42  See § 451.4 [ Acquired for Personal Use of Debtor ] § 75.4  Acquired for Personal Use of Debtor.

 

43  See § 451.2 [ Motor Vehicles and Any Other Thing of Value ] § 75.2  Motor Vehicles and Any Other Thing of Value.

 

44  See § 451.4 [ Acquired for Personal Use of Debtor ] § 75.4  Acquired for Personal Use of Debtor. See also 11 U.S.C. § 101(8) (which defines “consumer debt” to mean a debt incurred “by an individual primarily for a personal, family or household purpose”); 11 U.S.C. § 506(a)(2) (which addresses “property acquired for personal, family or household purposes”), discussed in § 450.1 [ New Valuation Standards ] § 76.7  Valuation after BAPCPA.

 

45  See § 451.4 [ Acquired for Personal Use of Debtor ] § 75.4  Acquired for Personal Use of Debtor.

 

46  See § 451.4 [ Acquired for Personal Use of Debtor ] § 75.4  Acquired for Personal Use of Debtor.

 

47  See § 451.3 [ Only PMSIs Need Apply ] § 75.3  Only PMSIs Need Apply.

 

48  See § 451.3 [ Only PMSIs Need Apply ] § 75.3  Only PMSIs Need Apply.

 

49  See § 451.3 [ Only PMSIs Need Apply ] § 75.3  Only PMSIs Need Apply.

 

50  See § 451.2 [ Motor Vehicles and Any Other Thing of Value ] § 75.2  Motor Vehicles and Any Other Thing of Value.

 

51  See § 451.2 [ Motor Vehicles and Any Other Thing of Value ] § 75.2  Motor Vehicles and Any Other Thing of Value.

 

52  See §§ 451.2 [ Motor Vehicles and Any Other Thing of Value ] § 75.2  Motor Vehicles and Any Other Thing of Value and 451.3 [ Only PMSIs Need Apply ] § 75.3  Only PMSIs Need Apply.

 

53  See § 103.2 [ Direct Payment of Secured Claims by Debtor ] § 74.8  Direct Payment of Secured Claims by Debtor before BAPCPA.

 

54  See § 445.1 [ Acceptance of Plan ] § 74.4  Acceptance of Plan after BAPCPA.

 

55  See §§ 446.1 [ Surrender of Collateral ] § 74.6  Surrender, Sale, Vesting in Lienholder and Payment with Property after BAPCPA and 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

56  See § 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

57  See §§ 102.1 [ Surrender or Sale of Collateral ] § 74.5  Surrender or Sale of Collateral before BAPCPA, 446.1 [ Surrender of Collateral ] § 74.6  Surrender, Sale, Vesting in Lienholder and Payment with Property after BAPCPA and 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

58  See § 101.1 [ General Rules ] § 74.1  General Rules before BAPCPA.

 

59  See § 264.1 [ To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim ] § 127.7  To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim.

 

60  See, e.g., Chrysler Fin. Corp. v. Nolan (In re Nolan), 232 F.3d 528 (6th Cir. 2000), discussed in § 264.1 [ To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim ] § 127.7  To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim.

 

61  See 11 U.S.C. § 1322(b)(2), discussed beginning at § 79.1  Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman.

 

62  541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), discussed in § 112.2 [ Present Value After Till ] § 77.3  Present Value after Till.

 

63  See above in this section. See, e.g., Drive Fin. Servs. v. Jordan (In re Jordan), 521 F.3d 343 (5th Cir. 2008) (Garwood, Garza, Benavides) (BAPCPA did not change rule announced in Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), that secured claim holders at cramdown in Chapter 13 cases are entitled to present value interest at prime rate plus a risk factor.); Community Am. Credit Union v. Griffin (In re Gallagher), Nos. KS-07-051, 06-22047, 2007 WL 2745808, at *2 (B.A.P. 10th Cir. Sept. 21, 2007) (unpublished) (“[A] debtor must pay the full amount of the claim, plus interest at the ‘prime-plus’ rate prescribed by [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)].”); DaimlerChrysler Fin. Servs. N. Am. LLC v. Griffin (In re Wilson), 374 B.R. 251 (B.A.P. 10th Cir. 2007) (910-day PMSI car claim must be paid in full with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest.); Ford Motor Credit Co. v. Robertson, 396 B.R. 672 (S.D. W. Va. 2008) (Faber) (910-day PMSI car lender is entitled to Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest without regard to contract rate.); Citifinancial Auto v. Smith, No. 07-2190-JAR, 2007 WL 2092980, at *2 (D. Kan. July 18, 2007) (unpublished) (Adopting Citifinancial Auto v. Hernandez-Simpson (In re Hernandez-Simpson), 369 B.R. 36 (D. Kan. 2007), “[b]ecause 910 claims are ‘allowed secured claims’ under the Code, interest must be paid on them at the Till rate to compensate the holder of the claim for its lost value in receiving deferred payments.”); Citifinancial Auto v. Hernandez-Simpson (In re Hernandez-Simpson), 369 B.R. 36 (D. Kan. 2007) (910-day PMSI car claim must be paid in full with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest.); In re Morris, 370 B.R. 796 (E.D. Wis. 2007) (910-day PMSI car claim is entitled to postconfirmation interest based on Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Harrison, 394 B.R. 879, 883 (Bankr. N.D. Ill. 2008) (Squires) (Interest rate provided by the debtors to 910-day PMSI car lender is appropriate under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Vandernick, Nos. 07-1068, 07-1192, 07-1024, 2008 WL 901685 (Bankr. N.D. W. Va. Mar. 31, 2008) (Flatley) (Hanging sentence requires debtor to pay postconfirmation present value interest at prime-plus rate mandated by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Lucier, No. 07-30658, 2007 WL 4868323 (Bankr. D.N.D. Dec. 5, 2007) (unpublished) (Hill) (Holder of 910-day PMSI car claim is entitled to interest at prime-plus rate described in Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Davis, No. 07-50761 RFH, 2007 WL 2710459 (Bankr. M.D. Ga. Sept. 12, 2007) (unpublished) (Debtor must pay 910-day PMSI car claim with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest notwithstanding that contract rate is less.); In re Thomas, No. 06-21363, 2007 WL 2462664, at *1 (Bankr. D. Kan. Aug. 27, 2007) (unpublished) (“[W]hen a debtor elects to retain collateral securing a 910-claim, the creditor’s claim should be treated as a secured claim for the full amount of the loan balance as of the date of the petition and . . . § 1325(a)(5)(B)(ii) requires the debtor to pay interest at the [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] rate on the allowed secured claim over the life of the plan.”); In re Marshall, No. 06-81935, 2007 WL 1725196 (Bankr. C.D. Ill. June 11, 2007) (unpublished) (910-day PMSI car creditor gets postconfirmation interest at rate prescribed by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), notwithstanding that debtor purchased car 40 days before Chapter 13 petition and contract rate is more than twice Till rate.); In re Phillips, 362 B.R. 284, 307 (Bankr. E.D. Va. 2007) (“[C]laims subject to the provisions of the ‘hanging paragraph’ are required to be paid with interest at a rate consistent with the holding of Till.”); In re Henry, 353 B.R. 261 (Bankr. D. Or. 2006) (A 910-day PMSI car claim must be paid in full with present value governed by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Grunau, 355 B.R. 334, 336 (Bankr. M.D. Fla. 2006) (Plan that modifies 0% car note for extension over 60 months must pay cramdown interest consistent with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), notwithstanding that increase in interest rate results. “[A] plan that modifies a secured creditor’s rights over the creditor’s objection is, in fact, a cramdown that triggers the Till requirement.”); In re White, 352 B.R. 633 (Bankr. E.D. La. 2006) (Portion of 910-day PMSI car claim that is purchase money is payable with interest determined by Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Trejos, 352 B.R. 249 (Bankr. D. Nev. 2006) (Debtor can pay present value of allowed claim that falls within the hanging sentence at the end of § 1325(a) with interest under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Vagi, 351 B.R. 881, 887 (Bankr. N.D. Ohio 2006) (Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), applies to 910-day PMSI car claims. “Till prevents Creditor from recovering that portion of its claim premised upon the contract rate of interest.”); In re Brill, 350 B.R. 853, 855–56 (Bankr. E.D. Wis. 2006) (Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), applies to 910-day PMSI car claim; 0% contract rate does not control. “Till analysis is still sound and applies to cases like this one where the contract rate of interest is below prime. . . . Nothing in Till suggests that the rule set forth in the case can be used to benefit debtors, but not creditors . . . . [I]f the plan proposes to pay the secured claim in installments over time, the Till rate of interest must be added to the payment to arrive at the present value of the claim. The contract rate of interest does not control the analysis.”); In re Ross, 355 B.R. 53 (Bankr. W.D. Tenn. 2006) (BAPCPA did not abrogate Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004); 0% contract that is modified by plan must be paid with prime plus risk factor interest.); In re Sparks, 346 B.R. 767, 771 (Bankr. S.D. Ohio 2006) (“[I]nterest on the debt is to be calculated pursuant to the Supreme Court’s decision in Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951[, 158 L. Ed. 2d 787] (2004).”); In re Brown, 346 B.R. 246 (Bankr. M.D. Ga. 2006) (910-day PMSI car claim must be paid in full with interest if the debtor wants to retain the car; present value interest is determined under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).); In re Murray, 346 B.R. 237, 245 (Bankr. M.D. Ga. 2006) (“[Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)], with its mandate regarding the payment of post-petition interest, is not abrogated. Secured claims qualifying under § 1325(a)(*) shall be paid at the interest rate set forth in Till so as to satisfy the present value requirement of § 1325(a)(5).”); In re Lowder, No. 05-44802, 2006 WL 1794737, at *6 (Bankr. D. Kan. June 28, 2006) (unpublished) (“Debtor . . . must comply with the unchanged requirement to provide present value . . . which result is mandated by § 1325(a)(5)(B)(ii), . . . to be paid with interest at the [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] rate.”); In re Soards, 344 B.R. 829, 831–32 (Bankr. W.D. Ky. 2006) (910-day PMSI car claim is entitled to discount rate at confirmation consistent with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004). “The language of 11 U.S.C. § 1325(a)(5)(B)(ii) was unchanged by BAPCPA and the Supreme Court’s interpretation of this language in Till is still valid. . . . [W]here the plan proposes to pay the secured claim in installments over time, the Till rate of interest must be added to the payment to arrive at the present value of the claim and the contract rate of interest is irrelevant to this analysis.”); In re Brooks, 344 B.R. 417, 422 (Bankr. E.D.N.C. 2006) (“[Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] has not been abrogated by BAPCPA and it is the appropriate rate of interest to apply to 910 claims.”); In re Bufford, 343 B.R. 827, 836 (Bankr. N.D. Tex. 2006) (“Congress did not give any indication in drafting the 910-day provision that it intended to overrule [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)] . . . . Congress . . . neither amended § 1322(b), nor amended § 1325(a)(5) to provide that interest on claims subject to the 910-day provision be paid at the contract rate or any other rate.”); In re Scruggs, 342 B.R. 571, 575 (Bankr. E.D. Ark. 2006) (“[T]he amendments contained in BAPCPA did not overrule the [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] decision, and that case is still binding precedent for establishing the proper interest rate even in cases where the creditor’s debt is secured by a ‘910’ vehicle.”); In re Shaw, 341 B.R. 543, 547 (Bankr. M.D.N.C. 2006) (“When Congress enacted BAPCPA, it is presumed to have known of the Supreme Court’s decision in [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)] . . . . [G]iven Congress’s knowledge of the Till decision and Congress’s decision not to change to [sic] the applicable statutory language when enacting BAPCPA, this court concludes that the Till rate remains the proper interest rate with which secured claims must be paid to meet the requirements of § 1325(a)(5)(B)(ii).”); In re DeSardi, 340 B.R. 790, 813–14 (Bankr. S.D. Tex. 2006) (“While the 910-paragraph cited above has limited the ability of debtors to strip down certain claims, nowhere does it (or its legislative history) limit the ability to adjust the interest rate associated with vehicle liens. . . . Congress had plentiful opportunity to overturn or constrain [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] in its recent BAPCPA amendments. . . . [T]his Court will continue to apply the Till rate in appropriate cases.”); In re Brown, 339 B.R. 818, 822 (Bankr. S.D. Ga. 2006) (“[W]hile the 910 Creditors are entitled to fully secured claims, the applicable interest rate necessary to meet the present value requirement of § 1325(a)(5)(B)(ii) is governed by [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)].); In re Fleming, 339 B.R. 716, 722 (Bankr. E.D. Mo. 2006) (“The 910 Day Car Language has no impact on the requirement to pay present value set forth in § 1325(a)(5)(B)(ii) other than to clarify the dollar amount of the claim which must receive present value. . . . [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004),] still controls what interest rate is required to ensure present value under § 1325(a)(5)(B)(ii).”); In re Wright, 338 B.R. 917 (Bankr. M.D. Ala. 2006) (Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), was not abrogated by BAPCPA and applies to 910-day PMSI car creditors.); In re Robinson, 338 B.R. 70, 75 (Bankr. W.D. Mo. 2006) (“Nowhere does the [House Report] mention an amendment relating to interest rates or [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004)]. . . . [T]he BAPCPA amendments did not overrule Till.”). See also Wachovia Dealer Servs. v. Jones (In re Jones), 530 F.3d 1284 (10th Cir. 2008) (Henry, Tacha, Lucero) (Court reserves question whether 910-day PMSI car claim is entitled to interest at rate in Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).). But see In re Franklin-Kidwell, No. 08-90911, 2008 WL 4516299 (Bankr. C.D. Ill. Sept. 9, 2008) (Fines) (Citing In re Wright, 492 F.3d 829 (7th Cir. 2007), 910-day PMSI car lender is entitled to present value interest at the original contract rate.).

 

64  See §§ 101.2 [ Acceptance of Plan ] § 74.3  Acceptance of Plan before BAPCPA and 445.1 [ Acceptance of Plan ] § 74.4  Acceptance of Plan after BAPCPA.

 

65  See, e.g., Shaw v. Aurgroup Fin. Credit Union, 552 F.3d 447 (6th Cir. 2009) (Boggs, Merritt, Griffin) (Hanging sentence is mandatory: Plan that crams down car claim is inconsistent with hanging sentence, and bankruptcy court has no discretion to confirm over objection of car lender.).

 

66  See, e.g., In re Garner, 399 B.R. 267, 273 (Bankr. D. Utah 2009) (Thurman) (“Simply because a creditor fails to object to the Plan’s treatment of its claim does not allow the Debtors to disregard the explicit language in the statute prohibiting such treatment. . . . There may be instances where a creditor’s silence constitutes acceptance of some matters under the Bankruptcy Code. The Court, however, is of the opinion that bifurcation of 910-day vehicle claims, as the Debtors propose here, is not one of those instances.”); In re Bethoney, 384 B.R. 24 (Bankr. D. Mass. 2008) (Hillman) (Claim that falls within hanging sentence at the end of § 1325(a) cannot be bifurcated notwithstanding absence of objection from lienholder.); Regional Acceptance Corp. v. Williams (In re Williams), Nos. 06-80695 13, 06-09024, 2007 WL 128891, at *5 (Bankr. M.D.N.C. Jan. 12, 2007) (unpublished) (Confirmation of plan that bifurcated 910-day PMSI car claim without adequate notice was not accepted by silence and was not binding. Plan valued RAC’s car collateral and bifurcated unsecured portion. Plan did not disclose that collateral was a 910-day PMSI car. RAC did not object to confirmation but filed an adversary proceeding after confirmation seeking a determination that the unsecured portion of its claim was not discharged and would remain subject to its lien following completion of payments. “[C]ourts in this district have now clearly established, a debtor may no longer modify a secured creditor’s 910 claim in a Chapter 13 plan pursuant to § 1325(a)(5)(B). . . . [A] secured creditor may expect that if it has a 910 claim, it will be treated as if fully secured . . . . [T]he Debtor’s Plan did not afford RAC with notice adequate to entitle it to preclusive effect. RAC was entitled to expect that its claim would be treated pursuant to the provisions of BAPCPA. . . . RAC had no notice that it held a 910 claim which was being treated in a manner contrary to the provisions of BAPCPA. . . . [T]o the extent that its claim is not paid in full under the Plan, RAC is entitled to an order stating that its claim will not be discharged upon completion of the Plan and that the Vehicle will remain subject to RAC’s lien until the claim has been paid in full.”); In re Montgomery, 341 B.R. 843, 845 (Bankr. E.D. Ky. 2006) (Sustains untimely objection to confirmation of plan that bifurcated a 910-day PMSI car claim. Citing In re Montoya, 341 B.R. 41 (Bankr. D. Utah 2006), hanging sentence at the end of § 1325(a) prohibits bifurcation and cramdown “even where the lender failed to object to the debtor’s proposed plan.”); In re Montoya, 341 B.R. 41, 44 (Bankr. D. Utah 2006) (On “independent review,” plan cannot be confirmed that bifurcates a 910-day PMSI car claim notwithstanding proper notice and absence of objection to confirmation. “The majority of courts interpreting the hanging paragraph hold that it precludes a Chapter 13 debtor from using § 506 to cram down a 910-day vehicle. This Court agrees with the majority.”).

 

67  See §§ 101.2 [ Acceptance of Plan ] § 74.3  Acceptance of Plan before BAPCPA and 445.1 [ Acceptance of Plan ] § 74.4  Acceptance of Plan after BAPCPA.