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.

In re Spurgeon,

Plans - Above-median-income Chapter 13 debtor could not deduct secured debt payments he would not be making on surrendered home.

In calculating the "projected disposable income" that he would have to devote to the payment of unsecured creditors in order to confirm, over the objection of the trustee, a plan which would result in less than a 100% payout to creditors, an above-median-income Chapter 13 debtor could not deduct, as "amounts scheduled as contractually due to secured creditors," the monthly payments that he would not have to make on a mobile home that he was surrendering. While the debtor may have been under a contractual obligation to make these payments on the petition date, a determination of the "amounts scheduled as contractually due to secured creditors" could not be made, at least in the Chapter 13 context for "projected disposable income" purposes, based solely on the facts as they existed on the petition date, without regard to circumstances existing at the time of confirmation or that would result from confirmation.

Date of decision: 12/7/07