Creditor Wells Fargo Corp. (Fargo) filed an objection to the confirmation of Debtor's Chapter 13 plan. In his plan, Debtor proposed to bifurcate and cramdown Fargo's undersecured claim using § 506 of the Code as was common practice prior to the enactment of certain provisions of BAPCPA. The "hanging paragraph" of § 1325(a), which was added by BAPCPA and became effective on October 17, 2005, prohibits bifurcation and cramdown where (1) the creditor has a purchase money security interest; (2) the debt was incurred within 910 days preceding the filing of the bankruptcy case; (3) the collateral for the debt is a motor vehicle; and (4) the motor vehicle was acquired for the personal use of the debtor.The Court SUSTAINED Fargo's objection holding that in the context of the retail installment sale of a motor vehicle in Georgia, "price," for purposes of Georgia's purchase money security interest statute, can include monies paid for an extended service contract and gap insurance.
Opinions
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Judge John T. Laney, III
Creditor objected to confirmation of Debtor's Chapter 13 Plan, where Debtor proposed to bifurcate the Creditor's claim on a vehicle driven and used exclusively by his wife. Overruling Creditor's objection, the court held that the hanging paragraph of 1325(a)(*) does not prevent bifurcation of a purchase money security interest on a 910 day vehicle where the vehicle was not purchased for the personal use of the Debtor.
Robert F. Hershner, Jr. (Retired)
The debtor's proposed Chapter 13 plan offered to pay the full amount of the creditor's "910 claim" (vehicle purchased for personal use within 910 days of the bankruptcy filing) plus the contract rate of interest (4.9%). The creditor argued that it was entitled to receive interest on its claim at the prime rate (8.25%). The court held that Till v. SCS Credit Corp., 541 U.S. 465 (2004), applied even though the contract rate was less than the prime rate. The court held that the creditor was entitled to receive the full amount of its 910 claim plus interest at the prime rate under the cram down provisions of § 13259(a)(5)(B).
Judge James D. Walker Jr. (Retired)
An oversecured creditor may add post-petition attorney fees to its secured claim if the fees are reasonable and provided for by agreement or state statute, even if the creditor does not comply with Georgia.s 10-day notice requirement.
An oversecured creditor may add post-petition attorney fees to its secured claim if the fees are reasonable and provided for by agreement or state statute, even if the creditor does not comply with Georgia.s 10-day notice requirement.
Court allowed unsecured claim when financial records of both the debtor and the creditor documented the claim as a trade debt.
Court applied 13-factor test to determine that undocumented advances made by Debtor.s sole shareholder to Debtor were loans rather than capital contributions. Consequently, the shareholder.s unsecured claim was allowed.
Once plan was confirmed, the trustee could apply all payments to the debtor's attorney, to the exclusion of other creditors, until the attorney had received $1,500.
The debtor's attorney is entitled to reasonable fees for necessary services he actually performed.
The debtor, for ten years, used credit cards to meet his living expenses and to maintain his lifestyle. The debtor filed for Chapter 7 relief after finding a new job that tripled his annual income. The United States trustee contended that granting Chapter 7 relief would be an abuse under the totality of the circumstances under section 707(b)(3) of the Bankruptcy Code. The court agreed that the debtor's Chapter 7 case should be dismissed, but allowed the debtor ten days to convert his Chapter 7 case to a case under Chapter 11 or Chapter 13.