In re Burt Case No: 07-23193

Plans - Negative equity payoff did not affect "purchase money" status of "910 creditor's" security interest.

A creditor that provided financing to the debtor less than 910 days prior to his Chapter 13 filing to allow the debtor to acquire a motor vehicle for his personal use held a "purchase money security interest" (PMSI) in the vehicle for the entire amount financed, and was thus protected by the "hanging paragraph" from having its claim bifurcated for purpose of "cramming down" a plan. It did not matter that the amount advanced included not only a sum sufficient to pay for the cash price of the new vehicle that the debtor was acquiring, including applicable taxes and fees, but to purchase an extended service contract on the vehicle, to pay for gap insurance, and to pay off the debtor's negative equity in a trade-in vehicle. The negative equity payoff and other charges represented part of the "price" of the new vehicle and were "value given to enable the debtor to acquire rights" in the new vehicle, within the meaning of a Utah statute defining "purchase money" obligations, especially where the parties structured the purchase transaction as a "package deal," and where, because of the debtor's marginal credit, he was required to trade in his old vehicle and to pay off the negative equity in order to qualify for financing on the new vehicle.

Date of decision: 10/24/07

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