Pay Your Credit Cards 0% in Chapter 13

zero percentBut I want to pay my debts….I just can’t do it at credit card interest rates.

What you want, then, is Chapter 13.

If the credit card company won’t agree to an interest rate that you can handle, you can impose a Chapter 13 repayment plan on them with the help of the bankruptcy court.

The creditor doesn’t have to agree.

You don’t have to negotiate.

And the bankruptcy judge will enforce the Chapter 13 plan you propose and the court confirms.

Chapter 13 works like this: you, the debtor, stay in possession of your assets. You commit to a payment plan that has to meet certain standards in the bankruptcy law.

  • Your creditors have to get as much in payments as they would in Chapter 7
  • Your payments have to be your best effort at repayment-according to formula
  • Your plan has to pay any delinquent family support or taxes in full

Beyond that, you have lots of freedom to propose plan terms. [Read more…]

Why Your Chapter 13 Bankruptcy Was Dismissed (And How To Avoid It)

chapter 13 bankruptcy dismissalFiling a Chapter 13 bankruptcy can feel like a brand new world. Unless you do your share, it won’t last for long.

Each month, thousands of people from around the country look to the bankruptcy court to stop a foreclosure, forestall a repossession, or simply to help reorganize their finances.

The beginning of the process involves a flurry of activity – filing a proper Chapter 13 Plan, stripping off liens, jettisoning some assets and resolving issues with the Chapter 13 trustee, judge and creditors.

The goal of most Chapter 13 bankruptcy cases is the same – curing a default, catching up arrears, and discharging certain obligations after a repayment plan is completed.

If you’re going to make this happen, you’ve got to be sure to stay clear of the issues that lead your Chapter 13 case to be dismissed. [Read more…]

Feedback Sought on National Form for Chapter 13 Plan

bankruptcychapter13signFeedback is being sought on a suggested mandatory national form for chapter 13 bankruptcy plans. The Advisory Committee on Bankruptcy Rules has created a working group to study the proposal and is holding a conference on January 18, 2013, to discuss current drafts of a plan form and bankruptcy rule amendments to implement the form.

  • January 18, 2013, 8:30 a.m. to 3 p.m.
  • Courtroom 2525 on the 25th floor
  • Everett M. Dirksen U.S. Courthouse
  • 219 S. Dearborn St., Chicago, IL

Seventeen representatives of several groups affected by the plan form and rule amendments: servicers, debtors, trustees, judges, and clerks, have been invited to join the rules committee and participate in the conference. The meeting is open to public observers.

wedoff

Judge Wedoff

The goal is to finalize a proposal for consideration by the Rules Committee at its April 2-3, 2013, meeting, according to Committee ChairmanEugene R. Wedoff, Bankruptcy Judge for the Northern District of Illinois and chair of the Advisory Committee on Bankruptcy Rules. The proposed form and rules changes also would have to be approved by the Committee on Rules of Practice and Procedure, the Judicial Conference, the Supreme Court, and then Congress. The plan and rules would be published for six months public comment in August 2013 and go into effect December 1, 2014, if approved at each stage of the rules making process.

Form Plan Working Group: Hon. Eugene R. Wedoff, John Rao, Prof. Troy McKenzie, Prof. Elizabeth Gibson, Hon. Elizabeth Perris, Hon. Arthur Harris, Hon. Judith Wizmer and Ricardo Kilpatrick.

Send your comments, accolades or criticisms, and suggestions to the Form Plan Working Group by email to Prof. Troy McKenzie and/or Judge Eugene Wedoff.

January 18 Agenda

8:30 ‐ 8:45 Welcome and Introductions

8:45 – 10:30 Panel 1. The Draft Form Plan
Panelists: Glenn Stearns, Judge Rebecca B. Connelly, William E. Brewer, Jr., Mary Beth Ausbrooks, Kathy Huffman, Lawrence Friedman. Committee Liaison: John Rao.

ï‚· Is the plan organized in a logical manner?

ï‚· Is the length of the plan a concern?

ï‚· Does the plan omit provisions that are necessary or frequently used?

ï‚· Does the plan include provisions that are unnecessary or infrequently used?

ï‚· Does the plan give sufficient guidance as to its operation after confirmation?

ï‚· Does the plan appropriately emphasize areas that present key issues in the chapter 13 process?

 Will the plan work in both mortgage conduit and non‐conduit jurisdictions?

ï‚· Should the plan specify a different treatment of home mortgages and other secured claims if relief from the automatic stay is granted?

 Does the plan appropriately treat the inclusion of non‐standard provisions?

 Is it advisable to propose a form dealing with pre‐confirmation adequate protection payments? Is the proposed form suitable for this purpose?

10:45 – 12:00 Panel 2. Draft Rule Amendments I
Panelists: Debra Miller, Judge Deborah J. Saltzman, Tara Twomey, Alane Beckett, Ramona Elliott. Committee Liaison: Judge Arthur Harris.

ï‚· Draft Rule 3002(a) requires a secured creditor to file a proof of claim in order to have an allowed secured claim. Does this amendment present particular concerns?

 Draft Rule 3002(c) changes the deadline for filing proofs of claim in chapter 13 cases to 60 days after the petition date so that proofs of claim are filed before the confirmation hearing date established by Code § 1324(b). Is this amendment an improvement over the current rule?

 Several interrelated rule amendments would provide that the validity, amount, and treatment of a claim under the plan will control over a proof of claim. Draft Rule 3012, together with draft Rule 3015(g), provide that the plan may make a binding determination of the amount of an allowed secured claim, as well as the amount of a claim entitled to priority treatment, subject to ultimate resolution at the confirmation hearing. Draft Rule 3007, in turn, provides an exception to the need to file a claim objection if claim allowance is resolved under Rule 3012. Similarly, draft Rule 4003(d) makes clear that a plan may provide for avoidance of liens under Code § 522(f). And draft Rule 7001 makes clear that an adversary proceeding is not necessary to determine the validity, priority, or extent of a lien resolved through a plan. Do these amendments present particular concerns?

ï‚· If any proposed amendment raises particular concerns, what alternative would you suggest, and how would the suggested alternative impact the draft plan?

12:45‐ 2:00 Panel 3. Draft Rule Amendments II
Panelists: Kevin Anderson, Judge William Brown, John Colwell, Andrew Altenburg, Michael Bates. Committee Liaison: Judge Elizabeth Perris.

ï‚· Draft Rule 3015(c) requires the use of the official form plan in all chapter 13 cases. Draft Rule 9009 limits modification of official forms so designated, including the form chapter 13 plan. Are these amendments advisable?

ï‚· Draft Rule 5009 provides that a debtor may obtain an order declaring that a lien has been satisfied, and that the order will be effective as a release of the lien. This provision is intended to facilitate documentation for title purposes. Does this amendment present concerns with respect to the timing of the order? Are there other concerns raised by this amendment?

 Several draft rule amendments concern service and notice in chapter 13 cases. Draft Rule 3015(d) is intended to ensure that creditors receive a copy of the plan before confirmation. Draft Rule 3015(f) provides that objections to confirmation must be filed and served seven‐days prior to the confirmation hearing. Draft Rule 3015(h) deals with notice of a modification of the plan after confirmation. Do these provisions adequately provide for notice to interested parties?

 Some of the draft amendments require enhanced service. Draft Rule 3012 provides that a request to determine the amount of secured and priority claims under a plan must be served in accordance with Rule 7004’s requirements for adversary proceedings. Draft Rule 4003(d), which concerns a plan proposing lien avoidance under Code § 522(f), and draft Rule 5009 also require service in accordance with Rule 7004. Are these enhanced service provisions appropriate?

 Because draft Rule 3015(f) sets a seven‐day default deadline for objections to plan confirmation, current Rule 2002(b)(2) would effectively require that notice of the confirmation hearing be given at least 35 days before the hearing. Should the Rules Committee consider amending Rule 2002(b)(2) to provide either for 21 days’ notice of the deadline to file objections to confirmation or 35 days’ notice of the confirmation hearing?

ï‚· If any proposed amendment raises particular concerns, what alternative would you suggest, and how would the suggested alternative impact the draft plan?

2:15 ‐ 3:00 Open forum to raise and discuss issues not previously addressed or fully covered, including the value of a national form for chapter 13 plans.

Additional Resources:

 

First published in Bankruptcy Law Network

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Chapter 13 Debt Limits

maximumChapter 13 Debt Limits

Update: Debt limits changed April 1, 2013.

$383,175 unsecured liquidated debt

$1,149,525 secured liquidated debt

 

Chapter 13 Plan Tweaked

The mandatory chapter 13 form plan for Kansas has been tweaked by the bankruptcy court. The changes go into effect for cases filed on or after December 1, 2012, per the standing order 12-1. The changes were made after receiving recommendations from the bench-bar committee.

Here is a redlined version of the two paragraphs changed in the mandatory chapter 13 form plan: [Read more…]

Can I Owe Too Much for Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is officially called an adjustment of debts for individuals with regular income. This relief is limited to people who have debts under the limits, but you have to owe a lot of money before you become ineligible.

What are the current chapter 13 bankruptcy debt limits?

UPDATE: As of April 1, 2013, § 109(e), eligibility for Chapter 13 is capped at the allowable unsecured debt limits increase of $383,175 and secured debt limits increase of $1,149,525.
These limits change every three years.  The next change will be April 1, 2016.

If you are not eligible for chapter 13 bankruptcy, you might be eligible to get help under another chapter of the bankruptcy code.

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What Can I Do If I Can’t Afford My Chapter 13?

by Peter Orville of Bankruptcy Law Network
You always have options if there are significant changes in your life during your Chapter 13. If you’ve been laid off, become sick, split up with your spouse or just can’t keep up with the rising price of gas, don’t give up hope. Your Chapter 13 is flexible…it can be modified to Full Article…
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341 Meeting: What Will They Ask Me?

Questions the Trustee is required to ask you at your bankruptcy hearing called a 341(a) meeting of creditors:

1. State your name and current address for the record.

2. Please provide your picture ID and Social Security number card for review.

3. Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?

4. Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct? Are there any errors or omissions to bring to my attention at this time?

Watch a short video of a typical 341 hearing.

5. Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?

6. Have you previously filed bankruptcy? (provide trustee with case number and the discharge information to determine discharge eligibility in this case)

7. What is the address of your current employer?

8. Is the copy of the tax return you provided a true copy of the most recent tax return you filed?

9. Do you have a domestic support obligation? To whom? Please provide the claimant’s address and telephone number, but do not state it on the record. Are you current on your post-petition domestic support obligations?

10. Have you filed all required tax returns for the past four years?

SAMPLE QUESTIONS THE TRUSTEE MAY ASK YOU

1. Do you own or have any interest whatsoever in any real estate? If owned: When did you purchase the property? How much did the property cost? What are the mortgages encumbering it? What do you estimate the present value ofthe property to be? Is that the whole value or your share? How did you arrive at that value? If renting: Have you ever owned the property in which you live and/or is its owner in any way related to you?

2. Have you made any transfers of any property or given any property away within the last one year period (or such longer period as applicable under state law)? If yes: What did you transfer? To whom was it transferred? What did you receive in exchange? What did you do with the funds?

3. Does anyone hold property belonging to you? If yes: Who holds the property and what is it? What is its value?

4. Do you have a claim against anyone or any business? If there are large medical debts, are the medical bills from injury? Are you the plaintiff in any lawsuit? What is the status of each case and who is representing you?

5. Are you entitled to life insurance proceeds or an inheritance as a result of someone’s death? If yes: PIease explain the detaiI s. If you become a beneficiary of any one’s estate within six months of the date your bankruptcy petition was filed, the trustee must be advised within ten days through your counsel of the nature and extent of the property you will receive. FRBP 1007(h)

6. Does anyone owe you money? If yes: Is the money collectible? Why haven’t you collected it? Who owes the money and where are they?

7. Have you made any large payments, over $600, to anyone in the past year?

8. Were federal income tax returns filed on a timely basis? When was the last return filed? Do you have copies ofthe federal income tax returns? At the time of the filing of your petition, were you entitled to a tax refund from the federal or state government ? If yes: Inquire as to amounts.

9. Do you have a bank account, either checking or savings? If yes: In what banks and what were the balances as of the date you filed your petition?

10. When you filed your petition, did you have:

a. any cash on hand?
b. any U.S. savings bonds?
c. any other stocks or bonds?
d. any certificates of deposit?
e. a safe deposit box in your name or in anyone else’s name?

11. Do you own an automobile? If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?

12. Are you the owner of any cash value life insurance policies? If yes: State the name ofthe company, face amount of the policy, cash surrender value, if any, and the beneficiaries.

13. Do you have any winning lottery tickets?

14. Do you anticipate that you might realize any property, cash or otherwise, as a result of a divorce or separation proceeding?

15. Have you been engaged in any business during the last six years? If yes: Where and when? What happened to the assets of the business?

Source: Executive Office of U.S. Trustee, Handbook for Standing Trustees.

Read more: http://bankruptcykansas.info/will-they-ask-me/#ixzz1MRyssLCT


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13 Reasons Chapter 13 Bankruptcy Ends Your Bill Problems

Chapter 13 bankruptcy is a powerful tool that may be able to help you end your bill problems. Here are 13 reasons Chapter 13 bankruptcy makes sense written by my Bankruptcy Law Network colleague, Doug Jacobs.

  1. Flexibility: you can dismiss the case at any time or even convert it to a Chapter 7. You can modify a plan if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.View Post
  2. A Chapter 13 will save a house from foreclosure as long as you can make the payments.
  3. You can strip a wholly unsecured second mortgage; or value a car if you’ve had it more than 910 days.
  4. You can challenge the costs added to your mortgage by the lender.
  5. Trustees want the plan to succeed and will work with you to get it confirmed.
  6. There are more debts that can be discharged including some divorce payments and damages for malicious and willful acts.
  7. Your attorney’s fees can be spread out rather than all due before filing.
  8. A Chapter 13 can be filed for one spouse even when married. (This is true of Chapter 7s also, but there are more advantages to having one spouse in a Chapter 13 plan.)
  9. You can avoid having to reaffirm a car in order to keep it.
  10. You can cure a tax problem or a Domestic Support Obligation (child support or alimony) over 60 months.
  11. You can stretch out your payments for a car or other secured debt.
  12. You won’t lose non-exempt property.
  13. Depending upon your income a Chapter 7 case can be challenged by the US Trustee, but not a Chapter 13.

 

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Chapter 13 Plan Form Mandated in Kansas Bankruptcy Court

The Kansas Bankruptcy Court judges adopted standing order SO_10_02 mandating the use of a chapter 13 plan form for all cases filed after March 1, 2011.  Differing language may be used but it must be placed in locations on the form for non-standard language.  The rule is designed to make it easier for readers to see chapter 13 plans deviate from “standard” language.

 

 

New Topeka 13 Trustee Payment Address

Payments to the Topeka Chapter 13 Trustee should be mailed to a new lock box address starting March 1, 2011:

Chapter 13 Trustee
PO Box 2159
Topeka Kansas 66601-2159

You may also hand deliver to the 24 hour drop box at the trustee’s office at 507 SW Jackson, Topeka, Kansas.

Make checks payable to “Jan Hamilton, Chapter 13 Trustee” and print your name and case number on the check.

Do not send correspondence to the payment post office box.  It is for payments only.  It is opened by bank personnel not the trustee.  There is a good chance your papers will not get delivered to the trustee if you use the payment address.  Correspondence should be sent to Jan Hamilton Trustee, PO Box 3527, Topeka, KS 66601.  Print your name and case number on your correspondence.

How do I know the chapter 13 trustee got my payment, you ask.  Sign up for free online access to your account so you can monitor your payments in and the trustee disbursements out.

Topeka Attorneys Observe U.S. Supreme Court Bankruptcy Argument in Lanning

We watched the arguments before the U.S. Supreme Court in Washington, D.C., yesterday in the bankruptcy case of Hamilton v. Lanning.

We are not involved in this case.  We attended as observers.  The case deals with the formula for determining how much a debtor has to pay her general creditors in a chapter 13 bankruptcy payment plan.  You can read the transcript or listen to the recording of the 60 minute hearing.

Jan Hamilton is the chapter 13 bankruptcy trustee in Topeka.  He objected to confirmation of Stephanie Lanning’s chapter 13 plan because she is not proposing to pay the disposable income determined by the means test.  Her previous six months’ income average was extraordinarily high due to two job lump sum severance payments she received in the fifth and sixth months prior to filing her bankruptcy.  She then lost her job and got a new job for less wages.  She cannot afford to pay the amount the means test dictates and proposed to pay less.

The bankruptcy court denied the trustee’s objection and said the means test is a presumption, a starting point, that the court has the discretion to look forward to determine a debtor’s projected disposable income.  The trustee appealed to the U.S. Court of Appeals for the Tenth Circuit, which affirmed.  The U.S. Supreme Court accepted the trustee’s appeal based upon opposing circuit court opinions between the mechanical approach and the forward looking approach.

At the argument, we saw Chief Justice Roberts and Justice Scalia vs. Justice Ginsberg and Justice Sotomayor–strict construction of the means test statute vs. finding an “escape” for this debtor who did not pass the means test because of job buyout and could not afford to pay the means test result.  Justice Alito seemed to share concerns with Justices Ginsberg and Sotomayor.  Justice Thomas, Justice Breyer and Justice Stevens did not ask any questions or make comments.  Justice Kennedy made a brief comment or two.  Justice Scalia evoked laughter a few times.

I was surprised and impressed by the Court’s command of bankruptcy law.  I did not expect that.  (I did not know yesterday that the Espinosa bankruptcy decision would be issued today.)  I am told the Court is hot for argument, meaning they have already read the briefs and taken a preliminary vote, prior to argument.  The Court peppered both sides with questions in a respectful way.  The trustee spoke about 90 seconds before Justice Ginsberg asked the first question.  He got several other minutes of his prepared speech made in spurts here and there and did a two minute rebuttal at the end. The trustee was a better advocate, in my view, but there was sympathy for the debtor’s plight. There also was deference to the government position.

All of the justices who spoke accepted the reset of current monthly income (CMI) period in 11 U.S.C. 101(10) though Justice Ginsberg thought it “odd” and Justice Sotomayor was concerned that debtor could reset CMI by failing to do something she was supposed to do (file I and J).  There was a discussion of judicial discretion.  The questioning Justices were not very interested in the debtor’s options in this case (delaying filing, filing a 7, converting to 7, dismissing and refiling).  Justice Ginsberg said conversion resulted in less money to creditors.  She also said dismissing and refiling was a waste of time and resources.

This case boils down to does the means test statute control or is there an “escape” for a debtor who is victim to a harsh result if the statute controls? Who knows what the result will be.  It is very difficult to tell from the argument.  I left the room thinking the debtor might win, but I know there is strong strict construction sentiment on the Court.

The juxtaposition of the parties was very odd.  It was strange having the government on the side of the debtor against the 13 trustee.  The government position was quite the opposite of the position the U.S. Trustee has taken on many other means test issues.  One has to wonder what would happen if the government was on the trustee side of the case.

Stephanie Lanning was present at the argument of her case.  She was represented by Tom Goldstein of Akin Gump, a veteran Supreme Court litigator. He runs a pro bono project with law students for unrepresented Supreme Court litigants and also publishes the SCOTUS blog.

Mr. Souter, the clerk of the court, also wore a morning coat with the traditional vest and pants.  The court marshal, the first female to hold the office, also wears a morning coat, although she was seated and I did not notice.  The solicitor general was represented by Sarah Harrington.  She wore a morning coat with tails over a skirt.  I am told all participants in SCOTUS arguments used to wear formal attire.  I read today that Elena Kagan, the newly appointed solicitor general and first woman to hold that office, and rumored to be on the short list for appointment to the U.S. Supreme Court, has broken with tradition and appeared before the Court in a dark pants suit.  Other women in her office wear a morning coat at their option.  None of the attorneys in the Lanning case wore formal attire, all were dressed in dark, business suits.

Each side had 30 minutes for argument.  The debtor and government split the time.  I thought the time would go very fast, but it felt like an eternity.  Everyone in the room was excited to be present but the tension was thick.

Clifford White, EOUST executive director, was present as were numerous chapter 13 trustees and other UST personnel.

A larger than normal number of members of the SCOTUS bar were present, I don’t know why.  I would think bankruptcy and tax, the topics of the day, would not be that popular.  Any member of the SCOTUS bar is allowed to come to argument and sit with the bar on a space available basis. NACBA member Dan Press  of Virginia was present.  Mark Neis sat with the bar as did the chapter 13 trustee from Wichita, KS and Gil Weisman of Becket & Lee (eCast attorney).  My daughter and I sat with invited guests right behind the bronze rail.  Each side is allowed six guests.  Hamilton graciously offered us two of his six seats.  He also invited his wife and step-son, Will Griffin, the chapter 13 trustee from Kansas City, Kansas, and the chapter 13 trustee from Maine.  Many people stood in line outside in the rain for the chance to be admitted to observe the argument.

The Courtroom was completely full.  You sit amazingly close to the Justices.  We were on the center aisle about six rows of chairs and two aisles back from the chief justice. Security was very tight and our movement was controlled every step.  We were commanded to remain seated and silent several times.  Hamilton was so close to the justices, he had to physically turn to address the each of them as he was questioned.

Hamilton had a moot court last week at Georgetown Law School before a group of law professors and others from around the area.

Win or lose, Hamilton and his staff attorney, Teresa Rhodd, did a fine job, for which all of us in Kansas can be proud.  They have spent hundreds of hours these past several months preparing.  We were able to find only a half dozen cases from Kansas in the Supreme Court since Brown v. Board of Education in the 1950s.  The Court accepts less than 100 cases per year out of ten thousand or more applications. The odds of a Topeka bankruptcy case before the Supreme Court of the United States is extremely small.

It was a fantastic experience to see an U.S. Supreme Court argument live.   I would recommend it to all of you.

Bankruptcy Code Gets Cost of Living Raise

Certain dollar amounts in the bankruptcy code are adjusted every three years for changes in the cost of living.  The next change will be April 1, 2010.  2010 Federal COLA adjustments


Chapter 13 Bankruptcy Debt Ceilings to Rise 7%

UPDATE: More people will be able to get help for their debt problems on April 1, 2013, when the chapter 13 debt limits increase about seven per cent.

$383,175 of unsecured debt

$1,149,525 of secured debt

These numbers are the caps on the amount of debt an individual may have and be eligible for chapter 13 bankruptcy. The ceilings apply to liquidated and noncontingent debts. Unliquidated and contingent debts are not counted in these limits. If your debts exceed these figures, you are ineligible to be a chapter 13 debtor. 11 U.S.C. §109(e). [Read more…]

Gap Insurance, Warranty Not PMSI

“TRANSFORMATION” RULE AND NEGATIVE EQUITY DISCUSSED; GAP
INSURANCE, SERVICE CONTRACT NOT PART OF COLLATERAL
In re Miller, Case No 08-40935
December 2008, Judge Karlin

Debtor sought, and was permitted, to pay only the cost of the car, rather than cost plus other charges. Court did not rule on whether certain fees not adequately addressed by either side were part of the PMSI. Good discussion of the transformation rule and negative equity.

Digest by:  Jan Hamilton, Trustee

Negative Equity

NEGATIVE EQUITY ISSUE NOT RULED UPON IN 1327 CASE
In re Kuhasz, Case No. 07-20282
November 2008, Judge Somers

Court noted split within the district. Judge Karlin excluded negative equity from PMSI claim in In re Padgett, 389 BR 203, while Judge Nugent included it. In re Ford 387 BR 14827 but declined to rule on the issue because the plan had been confirmed and the elements of 1329 had not been met.

NEGATIVE EQUITY ROLLED INTO LOAN IS NOT PMSI
In re Padgett, Case No. 07-41284
May, 2008 Judge Karlin

Car creditor objected to debtor’s attempt to avoid paying the negative equity in a 910 case. After analyzing the UCC as it exists in Kansas, the Court confirmed its opinion in Vega, but disagreed with Judge Nugent’s decision in Ford.

NEGATIVE EQUITY IS PMSI FOR PURPOSES OF 910 CAR LOANS
In re Ford, Case No. 07-11561
May 2008, Judge Nugent

Court held that negative equity in a trade in vehicle, financed by lender, is a part of the price of the collateral and constitutes value given to enable debtors to acquire collateral. The entire balance was found to be a “910” obligation under the hanging paragraph of 1325.

NEGATIVE EQUITY IS NOT PMSI
In re Kellerman, Case No. 06-22028
August 2007, Judge Berger

Pre petition payments are to allocated between refinanced negative equity and the PMSI portion of a 910 vehicle claim under 1325(a)’s hanging paragraph by reference to KSA 84-9-103(c). Under Kansas law, PMSI is the purchase price, not negative equity. Start with the vehicle’s cash purchase price and the apply pre petition payments in accordance with the parties written agreement. If no agreement or other manifested intent, the prepetition payments are applied first to unsecured negative equity and then to PMSI.

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