AmeriCredit Financial Services v. Howard (In re Howard)
United States Court of Appeals for the Seventh Circuit
597 F.3d 852 (2010)

- Written by Rich Walter, JD
Facts
Aubrey Howard (plaintiff) wanted to replace his old car. After subtracting the car’s current value from what Howard still owed in car payments, Howard’s negative equity in the car amounted to $8,000. Nevertheless, Howard bought a new car priced at $30,000. After trading in his old car and making a $4,500 down payment, Howard still owed his Illinois car dealer $25,500, plus an additional $2,000 in taxes and fees, for a total of $27,500. Howard bundled this amount with his negative equity in the old car for a total of $35,500, which Howard borrowed from AmeriCredit Financial Services (AmeriCredit) (defendant). Howard later declared Chapter 13 bankruptcy. Howard petitioned the bankruptcy court to extend its cramdown power to the $8,000 negative-equity portion of Howard’s AmeriCredit loan. AmeriCredit opposed Howard’s petition. The bankruptcy court applied Illinois’ Uniform Commercial Code (UCC) and ruled in AmeriCredit’s favor. Howard appealed to the Seventh Circuit.
Rule of Law
Issue
Holding and Reasoning (Posner, J.)
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