RSS“910 Creditor” did not have purchase money security interest for funds advanced to pay off negative equity in trade-in.
Jul 06
A creditor that provided financing within 910 days prior to the commencement of the debtors’ Chapter 13 case to enable the debtors to purchase a motor vehicle for their personal use did not have a “purchase money security interest” in this newly acquired vehicle, and was not protected by the “hanging paragraph” from having its claim bifurcated for purpose of cramming down a plan, to the extent that the funds advanced included a sum for the payoff of the debtors’ negative equity in a trade-in vehicle. While payoff of the prior car loan as part of the new motor vehicle financing transaction was certainly convenient for both the creditor and debtors, and while the creditor might not have been willing to loan money for the new car vehicle stop repossession dallas unless the old loan was paid off, the payoff of negative equity in the trade-in was not necessary for the debtors to acquire rights in the new vehicle in the same manner as other items listed in the Official Comments to the Kansas Uniform Commercial Code (UCC), nor were the sums that the creditor advanced to pay off negative equity in fact used to buy the new vehicle.
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