In re Lisa Kay Weiser

The Hanging Paragraph of Section 1325(a) protects a purchase money creditor where the loan proceeds were used to not only finance the purchase of a new car, but also to pay off the lien on a separate car being traded in, if the evidence shows that the debtor would not have been able to purchase the new car unless the lien on the trade-in was paid off. Therefore, the creditor's purchase money security interest includes funds used to pay off the old car. In addition, the PMSI covers the portion of the loan used for gap insurance and an extended service warranty, since they represent expenses incurred in connection with acquiring rights in the vehicle.

Date of decision: 12/18/07

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