539 B.R. 445
Bankr. D. Vt.2015Background
- Debtor owned multiple trucks/trailers; GE Capital (GECC) held perfected liens on 11 items, including a 2012 Hyundai trailer (the “Missing Trailer”).
- Debtor filed Chapter 13 on June 5, 2014; a stipulation and court order (Dec. 2014) granted GECC relief from stay and approved surrender of certain trailers, including the Missing Trailer.
- GECC’s agents attempted repossession in early January 2015 but did not find the Missing Trailer at Debtor’s premises; neither party currently possesses or knows the trailer’s whereabouts.
- The Missing Trailer disappeared between Nov. 15, 2014 and Jan. 15, 2015; Debtor cannot recall when or how it left his property and admits gaps in memory.
- Debtor submitted insurance binders for the trailer but premiums were unpaid; there was no effective insurance after Nov. 15, 2014.
- Debtor’s Chapter 13 plan treats GECC’s claim as unsecured based on alleged surrender; GECC objects to confirmation and to the plan’s classification of its claim.
Issues
| Issue | GECC's Argument | Debtor's Argument | Held |
|---|---|---|---|
| Whether Debtor "surrendered" the Missing Trailer for §1325(a)(5) purposes | Debtor did not make trailer available; surrender not shown | Debtor contends he surrendered or otherwise treated trailer as surrendered | Held: Debtor did not sustain burden to show surrender; trailer not made available to GECC |
| Whether plan meets §1325(a)(5) (treatment of secured claim) | Plan improperly treats secured claim as unsecured; confirmation fails | Plan treats claim as surrendered/collateral given up so unsecured treatment appropriate | Held: Confirmation denied — plan fails §1325(a)(5) because surrender not proven |
| Whether Debtor proposed plan in good faith | GECC: Debtor’s failures to notify, insure, or report loss show bad faith | Debtor: Memory lapses and mistaken belief GECC repossessed explain conduct; no culpable intent | Held: Good-faith objection overruled; court credits Debtor’s testimony and finds no bad faith |
| Whether GECC’s claim is unsecured in this bankruptcy | GECC: Proof of claim is prima facie valid; classification premature absent objection | Debtor: Requests declaration that GECC’s claim is unsecured | Held: Court defers ruling; will address secured status if/when claim objection is timely filed |
Key Cases Cited
- In re White, 487 F.3d 199 (4th Cir.) (surrender requires making collateral available; physical transfer not required)
- In re Pratt, 462 F.3d 14 (1st Cir.) (surrender means relinquishment of rights and availability of collateral to creditor)