In re Anderson, (Bkrtcy.D.Or.)

Plans - Debtors could require additional notice regarding mortgage escrow through Chapter 13 plan language.

Chapter 13 debtors could, through language in their proposed plan, require their residential mortgage lender to provide notice to the Chapter 13 trustee and the debtors' counsel, in addition to the debtors, about changes in the escrow amounts required and about any shortages, deficiencies, or surplus of funds held in escrow. The additional notice was more in the nature of a procedural requirement to aid case administration than an impermissible modification of the lender's rights, and the debtors' deemed authorization of such notices under a local rule insulated the lender from automatic stay violations.

In re Gray, (Bkrtcy.E.D.Tenn.)

Plans - Security interest was purchase money security interest, as required to prevent claim bifurcation under hanging paragraph.

A Chapter 13 debtor's prepetition retail installment financing agreement for a vehicle applied the cash down payment and rebates to satisfy the negative equity in the vehicle that the debtor was trading in as a part of the transaction, such that no portion of the loan extended to the debtor to buy the new vehicle was used to pay the negative equity. Therefore, under Tennessee's version of the Uniform Commercial Code, the creditor's security interest in the vehicle was entirely a purchase money security interest, as required for the creditor's secured claim to be protected from bifurcation under the plan confirmation statute's hanging paragraph.

Craig Matthew Frederickson, Debtor, David D. Coop, Trustee-Appellant. v. Craig Matthew Frederickson, Dbtr-Appellee. Case No.07-6025

Above-median debtor whose projected disposable income is negative is not required to propose a plan that runs five years, and the bankruptcy court did not err in confirming a 48-month plan. Dissenting opinion by Judge Federman, MOW.

Date of the decision: 8/15/07

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Article regarding this case.

In re Murray Case No: 05-48017

Creditor Nuvell Financial Services Corp. (hereinafter, “Nuvell”) filed an objection to the confirmation of Debtors’ Chapter 13 Plan on the basis that the treatment of Nuvell in the plan did not comport with the requirements of the “hanging paragraph” of 11 U.S.C. § 1325(a) (hereinafter, “§ 1325(a)(*)”). Debtors purchased a motor vehicle within 910 days of filing their Chapter 13 bankruptcy petition. The vehicle was purchased for the personal use of Debtors. At the time the vehicle was purchased, Debtors also purchased an extended service contract and were assessed a documentary fee by the seller. Debtors argued that the purchase of the extended warranty and the payment of the documentary fee with monies meant for the purchase of the vehicle alone, prevented Nuvell from holding a purchase-money security interest.

The Court held that Nuvell in fact held a purchase-money security interest and that the other requirements of § 1325(a)(*) were met so as to qualify Nuvell’s claim for treatment under that section. Further, the Court held that § 1325(a)(*) does not prevent a claim qualifying under that section from being an “allowed secured claim” for purposes of § 1325(a)(5) and its present interest requirement. Section 1325(a)(*) serves to prevent the bifurcation of an under-secured claim into a secured and unsecured portion under § 506. This holding is consistent with the vast majority of cases considering the meaning of § 1325(a)(*). The Court’s interpretation is also consistent with the plain meaning of the statute and with the legislative history on the section.

The Court also considered the issue of post-petition interest rates to be paid in accordance with § 1325(a)(5) on secured claims that qualify for treatment under § 1325(a)(*). The Court concluded that the United States Supreme Court case of Till v. SCS Credit Corp., 541 U.S. 465 (2004), was applicable to claims falling under § 1325(a)(*). The Supreme Court held in Till that § 1325(a)(5) required that interest on allowed secured claims should be paid at a current rate determined by an adjustment from the prime rate based upon the risk of nonpayment. Being as the Court concluded that a claim qualifying under § 1325(a)(*) is an “allowed secured claim” for purposes of § 1325(a)(5), the interest rate set forth in Till is appropriate.

Date of decision: 6/6/06

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In re Gagne, 2007 BNH 041

Overruling the debtor’s objection to the mortgagee’s claim on the grounds that only 11 U.S.C. § 1322(e), and not 11 U.S.C. § 506(b), determines the amount a debtor must pay to cure an arrearage through a chapter 13 plan and concluding that under NH state law and the terms of the debtor’s mortgage the attorney’s fees and costs requested by the mortgagee in this case were reasonable and must be paid through the debtor’s plan.

Date of decision: 11/21/07

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