In re Sanders

377 B.R. 836 (2007)

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In re Sanders

United States Bankruptcy Court for the Western District of Texas
377 B.R. 836 (2007)

Facts

On December 4, 2004, the Sanderses (debtors) purchased a Ford Explorer from a local dealer for $26,523.05. The Sanderses financed the purchase with Ford Motor Credit (FMC) (creditor) and gave FMC a security interest in the Ford Explorer. To avoid taking on too much debt, the Sanderses traded in their old vehicle for $8,000. However, there was a lien for $10,324.13 on the old vehicle, which left the Sanderses with $2,324.13 in negative equity on the trade-in. Accordingly, the Sanderses’ financing included an additional $2,324.13 to pay the dealer, so the dealer could extinguish the lien and resell the old vehicle. On March 30, 2007, the Sanderses filed for Chapter 13 bankruptcy. During bankruptcy proceedings, FMC contended that its claim should be treated as a fully secured 910-day claim under 11 U.S.C. § 1325(a)(9) such that the bankruptcy court could not bifurcate and cramdown its claim. The Sanderses contended that FMC’s claim did not qualify as a 910-day claim because the financing provided by FMC was not entirely purchase money as required by the United States Bankruptcy Code.

Rule of Law

Issue

Holding and Reasoning (Clark, J.)

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