586 B.R. 14
Bankr. E.D. Tenn.2018Background
- Debtor bought a 2016 Nissan Altima on July 2, 2016, financed by Nissan; petition filed Oct. 18, 2017 (within 910 days).
- Nissan filed a proof of claim for ~$27,868; debtor’s Chapter 13 plan proposed treating Nissan’s secured claim at a $15,000 value with 4% interest.
- Nissan objected to confirmation, invoking the §1325(a) “hanging paragraph” (the 910‑day anti‑cramdown provision for purchase‑money auto loans acquired for debtor’s personal use).
- Retail installment contract printed the primary use as “personal, family, or household”; dealer did not ask debtor about intended use and marked other-use line “N/A.”
- Debtor is a healthcare provider required by her employer to transport patients 3.5–6 hours per workday, reimbursed for mileage; she also uses the car for ordinary personal errands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Altima was “acquired for the personal use of the debtor” under the §1325(a) hanging paragraph, thus precluding §506 cramdown | Nissan: debtor’s use includes personal use and the retail contract designates ‘personal,’ so hanging paragraph applies and cramdown is barred | Debtor: vehicle is predominantly used to perform job duties (transporting patients); therefore use is business, hanging paragraph does not apply and §506 may bifurcate the claim | Held: Vehicle predominantly used for debtor’s job; not "acquired for personal use." Hanging paragraph does not apply; §506 can be used. Nissan’s objection overruled |
Key Cases Cited
- In re Lorenz, 368 B.R. 476 (Bankr. E.D. Va. 2007) (discusses lack of statutory definition of “personal use” and standards courts apply)
- In re Grimme, 371 B.R. 814 (Bankr. S.D. Ohio 2007) (addresses interpretation of hanging paragraph and mixed use vehicles)
- In re Solis, 356 B.R. 398 (Bankr. S.D. Tex. 2006) (defines personal use as transportation satisfying personal wants/needs and endorses a ‘‘significant and material’’ personal‑use focus)
- In re Hill, 352 B.R. 69 (Bankr. W.D. La. 2006) (applies a test asking whether vehicle enabled debtor to make a significant contribution to income)
- In re Johnson, 350 B.R. 712 (Bankr. W.D. La. 2006) (formulates income‑contribution approach referenced by Hill)
- In re Ozenkoski, 417 B.R. 794 (Bankr. E.D. Mo. 2009) (endorses Joseph’s predominance test as most practical and critiques alternate tests)