MEMORANDUM OF DECISION
This confirmation contest, submitted for decision on a stipulated record, calls for construction of the so-called “hanging paragraph,” added to Bankruptcy Code § 1325(a)(9) by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). 1 The critical issue is whether a creditor holding a security interest in a motor vehicle, who otherwise comes within the “anti-birfurcation” protection of the hanging paragraph, is entitled to that protection if its lien secures a *212 debt consisting not only of the sale price of the vehicle, but of the amount required to pay off a lien encumbering a trade-in, as well.
On this point (and others), the hanging paragraph’s meaning is not crystalline. As explained below, I conclude that because the secured claim at issue is comprised of both purchase-money and nonpurchase-money components, it is subject to modification in the debtors’ Chapter 13 plan. 2
The Statutory Context
Before we turn to this case’s simple facts, a preliminary precis of statutory context is useful. With it in hand, the essence of the dispute will quickly become clear.
Commonly, bankruptcy rehabilitation includes adjustment of obligations owed to creditors holding liens on a debtor’s property. Principally, lien creditors are deemed to hold a secured claim only to the extent of the value of the property their lien encumbers. Beyond that amount, the balance the debtor owes is treated as a separate, unsecured claim.
See
§ 506(a). The concept is commonly dubbed claim “bifurcation.”
See generally,
4 ColljeR On Bankruptcy ¶ 506.03 (Alan N. Resnick & Henry J. Sommer, eds., 15th ed. rev. 2007).
3
The debtor’s plan will be confirmed if it provides that the secured claim will receive payments with a present value equal to the value of the collateral.
See
§§ 1325(a)(5)(B)(ii); 1129(b)(2)(A)(i)(II). To that extent, the lien continues to secure the claim.
See
§§ 1325(a)(5)(B)(i)(I); 1129(b)(2)(A)(i)(I);
see also Brooks v. General Motors Acceptance Corp. (In re Brooks),
The bifurcation power is not without exceptions. Although Chapter 13 debtors are generally able to “modify” (read bifurcate) the claims of secured creditors, § 1322(b)(2) precludes modification of the rights of creditors whose claims are secured “only by a security interest in real property that is the debtor’s principal residence....” 11 U.S.C. § 1322(b)(2);
see, e.g., Lomas Mortgage, Inc., v. Louis,
For consumer debtors, bifurcation has historically enabled them to modify the claims of creditors who financed car purchases and who held liens on the vehicles to secure their claims. As Judge Clark recently explained:
Outside of bankruptcy, of course, a car creditor’s being underwater only matters if the creditor actually has to repossess and sell the car to satisfy its claim. So long as the debtor wants to keep the car, however, the only way for the debtor to get a release of the security interest on the car is to pay off the car debt in full. Inside bankruptcy, however, the debtor is permitted to “mimic” what would happen in the event the lender sold the vehicle to satisfy the debt, but without the consequences of actually losing the car. A court rules what that value would be, without actually exposing the vehicle to sale, and the resulting number becomes the number that ends up being “financed” by way of section 1325(a)(5)(B)(ii). The balance of any debt owed the creditor is then separately treated as unsecured debt, paid pro rata along with other unsecured creditors.
In re Sanders,
(a) Except as provided in subsection (b), the court shall confirm a plan if—
ífc ifc * * ❖ #
(5) with respect to each allowed secured claim provided for by the plan—
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that—
(I) the holder of such claim retain the lien securing such claim until the earlier of—
(aa) the payment of the underlying debt determined under nonbank-ruptcy law; or
(bb) discharge under section 1328; and
(II) if the case under this chapter is dismissed or converted without completion of the plan, such lien shall also be retained by such holder to the extent recognized by applicable nonbankruptcy law; and
(ii) the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim; and (hi) if—
(I) property to be distributed pursuant to this subsection is in the form of periodic payments, such payments shall be in equal monthly amounts; and
(II) the holder of the claim is secured by personal property, the amount of such payments shall not be less than an amount sufficient to provide *214 to the holder of such claim adequate protection during the period of the plan; or
(C) the debtor surrenders the property securing such claim to such holder;
* * # # ❖
(9) the debtor has filed all applicable Federal, State, and local tax returns as required by section 1308.
For purposes of paragraph (5), section 506 shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the 910-day [sic] preceding the date of the filing of the petition, and the collateral for that debt consists of a motor vehicle (as defined in section 30102 of title f9) acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing.
11 U.S.C. § 1325(a)(emphasis supplied).
Simply stated (for our purposes) 4 the hanging paragraph’s provisions apply to prevent bifurcation of claims (a) secured by a “purchase money security interest,” (2) in a “motor vehicle,” (3) “acquired for the personal use of the debtor,” (4) within the “910-day [sic] preceding the date of the filing of the petition.”
But stating the statute’s terms is easier than applying them. The hanging paragraph’s provisions have spawned multiple issues, including the meaning and proper application of “personal use of the debt- or,” 5 the contours of “purchase money security interest,” 6 what constitutes a “motor vehicle,” 7 and what it means to say *215 “section 506 shall not apply.” 8
Facts
Corrina Look purchased a 2005 Subaru Impreza on credit from Patriot Subaru on December 30, 2004. The retail installment contract she signed granted Patriot a first priority security interest in the Subaru, securing all Corrina’s payment obligations. Bank of America took assignment of the contract and its accompanying lien. Including a service contract and sales tax, the contract shows the Subaru’s “cash price” as $21,796.26.
As part of the deal, Corrina traded in her older car, receiving an allowance of $13,900.00. At the time, however, the loan balance secured by a hen on the trade-in was $21,222.26, resulting in a “negative net trade-in” of $7,322.26. After applying a $1,500.00 manufacturer’s rebate, the “negative net trade-in” was reduced to $5,822.26. Corrina was also charged for gap insurance ($495.00) and documentation ($245.00). Taking all charges and the trade-in into account, the total amount financed in the transaction was $28,358.52. 9 Bank of America retained a lien on the Subaru to secure payment of that sum.
The parties agree that the Subaru is a “motor vehicle,” that the car was purchased for Corrina’s “personal use,” that Bank of America’s lien is perfected, and that Corrina incurred the debt secured by the Subaru within 910 days of her chapter 13 filing.
As of Corrina’s bankruptcy filing, Corri-na owed Bank of America $20,599.13 on the car loan. Her plan proposes to satisfy the bank’s secured claim with payment of $12,416.00, at 8.0% interest. 10
Discussion
Bank of America insists that Corrina’s plan pay the entire contract balance as a secured claim because it holds a “purchase money security interest,” thus entitling it to the hanging paragraph’s anti-bifurcation protections. Corrina asserts that, since the bank’s lien secures obligations other than the price of her car (viz., the value extended to pay off the loan on the trade-in), those protections do not apply and the bank’s secured claim can be reduced to the value of its collateral via § 506(a).
1. What constitutes a “purchase money security interest” for purposes of the hanging paragraph?
The Code itself provides no definition of “purchase money security interest.”
In re Sanders,
Most courts acknowledge that, notwithstanding the Code’s lack of direction on the point, the term “purchase money security interest” (or “pmsi”) carries with it a generally understood content, rooted in the Uniform Commercial Code (“U.C.C.”).
See
11 M.R.S.A. § 9-1103 (Supp.2007) (Maine’s U.C.C.)
see, e.g., In re Vega,
At least one court, paying heed to the U.C.C.’s caveat, and considering that some differences do exist in the way state courts interpret and apply the term, has concluded that a uniform, federal definition of “purchase money security interest” should be employed so that the hanging paragraph is applied uniformly, in a fashion consistent with federal bankruptcy objectives.
See In re Westfall,
Other courts, aware of the divergence in rulings on this issue, have looked to state
*217
law to garner a “general understanding” of the undefined term. “While there is temptation to look for a federal definition of ‘purchase money security interest,’ prominent use of a term of art so closely identified with the Uniform Commercial Code and established state law counsels reference to state law.”
In
re
Hayes,
Sanders’
reasoning is convincing. “The Supreme Court held in
Butner v. United States ...
that state law determines rights and obligations when the Code does not supply a federal rule.” In re Wright,
The Code often incorporates, or defers to, state law, leading to “inconsistent” results, but without doing violence to the overall objectives of bankruptcy.
See, e.g.,
§ 522(b)(permitting the debtor’s use of state law exemptions); § 546(b)(subjeet-ing certain rights and powers of a trustee to “any generally applicable law” that
*218
meets certain criteria); § 723(a)(granting the trustee a claim against a general partner “to the extent that under applicable nonbankruptcy law such general partner is personally liable for such deficiency”). In particular, when no federal objective requires another result, the defining content of property interests has long been understood to be the province of state law. “Though federal law determines what property constitutes property of the bankruptcy estate, ‘[pjroperty interests are created and defined by state law.’ ”
In re Tuck,
No. 06-10886-DHW,
Thus, I reject the premise that federal bankruptcy objectives necessitate adoption of a federal definition of the term “purchase money security interest,” and turn to state law to inform our inquiry.
The U.C.C. entwines the definition of “purchase money security interest” with those of other, related terms. The statute defines “purchase-money collateral” as “goods or software that secures a purchase-money obligation incurred with respect to that collateral.” 11 M.R.S.A. § 9-1103(l)(a)(Supp.2007). A “purchase-money obligation” is “an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.” 11 M.R.S.A. § 9-1103(l)(b)(Supp.2007). Finally, “[a] security interest in goods is a purchase-money security interest ... [tjo the extent that the goods are purchase-money collateral with respect to that security interest.” 11 M.R.S.A. § 9-1103(2)(a)(Supp.2007).
Bank of America maintains that, under the U.C.C. definition of “purchase money security interest,” it holds a secured claim on the entire balance owed under the contract because the negative equity resulting from the trade-in of Corrina’s former vehicle is part of the price of the collateral. Whether such negative equity is included in the “price of the collateral” has been addressed by other courts, with inconsistent results.
See In re Tuck,
Guidance from the drafters of the U.C.C. appears in the form of Official Comment 3, which reads in part:
[Tjhe definition of “purchase-money obligation,” the “price” of collateral or the “value given to enable” includes obligations for expenses incurred in connection with acquiring rights in the collateral, sales taxes, duties, finance charges, *219 interest, freight charges, costs of storage in transit, demurrage, administrative charges, expenses of collection and enforcement, attorney’s fees, and other similar obligations.
The concept of “purchase-money security interest” requires a close nexus between the acquisition of collateral and the secured obligation. Thus, a security interest does not qualify as a purchase-money security interest if a debtor acquires property on unsecured credit and subsequently creates the security interest to secure the purchase price.
A careful reading of the Comment does not support counting negative equity as part of a 910-day car lender’s purchase-money obligation. The listed examples do not include value given to pay off an existing debt. Admittedly, the list itself is not exhaustive.
In re Cohrs,
2. Consequences of the non-PMSI nature of Bank of America’s Lien
Given my conclusion that the loan secured by Bank of America’s lien on Corrina’s car is not a purchase money security interest, the question becomes: What are the consequences of that determination.
Again, this situation has not lain unexamined by the courts. Most, having mined state law in determining the content of “purchase money security interest,” apply state law concepts in determining the consequences of an “unpure PMSI.”
See, e.g., In re Pajot,
*220 I agree with the Sanders court that, although we must look to state law to determine the content of the term that triggers the hanging paragraph’s application, it is unnecessary, indeed inappropriate to look to state law to determine the consequences of a determination that a lien is not a purchase money security interest. As discussed in Sanders:
The application of the dual status and transformation rules are appropriate in the non-bankruptcy context when deciding (under state law) whether and to what extent a creditor retains a purchase money security interest when part of the consumer debt is a non-purchase money obligation.
Our task is different. Our task is to determine whether [the secured creditor] qualifies for the special protection afforded certain creditors under the 910-day provision of the Bankruptcy Code, a question of federal law. For that task, state law rules regarding the application of either the transformation rule or dual status rule are simply irrelevant. ... We looked to state law to understand the common meaning of a particular term which was otherwise undefined by the Bankruptcy Code. We did so because accepted rules of statutory construction employed by federal courts counsel us to do so. Once that task has been completed (as it has been here), we must then return to our original task, that of divining the correct interpretation of the statutory language enacted by Congress in the hanging paragraph appended to section 1325(a).
Sanders,377 B.R. at 858 . Thus, there is no need to consider the application of the dual status or transformation rules; the language of the Code, not state law, directs the treatment of Bank of America’s lien.
The statute provides that § 506(a) bifurcation shall be excluded
“if the creditor has a purchase money security interest securing the debt that is the subject of the claim.”
§ 1325(a)(emphasis added). The decision to employ conditional “if’ language rather than “to the extent” language bolsters the conclusion that Congress did not extend such protections in instances where creditors possess partial pmsi’s. As noted recently by the Bankruptcy Appellate Panel for this Circuit, “[i]t is generally presumed that Congress acts intentionally and purposely when it includes particular language in one section of a statute but omits it in another.”
Kibbe v. Sumski (In re Kibbe),
Possession of a claim secured by a purchase money security interest qualifies a creditor for the exception to the general rule that claims may be bifurcated to the extent of the value underlying collateral securing the claim. Just as Corrina’s car must have been purchased for her personal use within 910 days of the bankruptcy filing, so must this prerequisite must be met in order for Bank of America’s claim to avoid the reach of § 506. “[T]he plain language of the hanging paragraph of section 1325(a) clearly and unambiguously calls for an all-or-nothing rule....”
In re Sanders,
Because not all of the debt in question is secured by a pmsi, § 1325(a) does not apply and Bank of America’s lien is subject to modification.
Conclusion
Bank of America’s objection is overruled. A final hearing on confirmation of the Looks’ Chapter 13 plan will be set forthwith.
Notes
. BAPCPA is Pub.L. 109-8, 119 Stat. 23 (April 20, 2005).
The section in question, set forth infra at p. 5, has been called the “hanging paragraph” because, although set forth as a subparagraph following § 1325(a)(9), it is not separately designated by letter or number. Some courts treat it as part of § 1325(a)(9), while others have denominated it § 1325(a)(*)- See In re Pajot,371 B.R. 139 , 143 n. 2 (Bankr.E.D.Va.2007).
Unless otherwise indicated, all citations to statutory sections are to the Bankruptcy Code of 1978, as amended, 11 U.S.C. § 101 et seq.
This memorandum sets forth my findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52 and Fed. R. Bankr.P. 7052, 9014(c).
. I say the explanation will be lengthy. Although it will be long enough to test many readers' patience, I do not intend to recite the rationale's recipe from scratch. Many courts have explained the issues and options comprehensively. This opinion will reference their work and refer the reader to it, rather than repeat it here.
. Section 506 provides, in relevant part:
(a)(1) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor's interest. 11 U.S.C. § 506(a)(1).
. For today, we needn’t concern ourselves with the hanging paragraph’s application to claims secured by "anything of value” if the "debt was incurred” within a year of bankruptcy.
.
See, e.g., In re Hickey,
. See discussion infra.
.The law on this point is, in a word, undeveloped. The hanging paragraph references 49 U.S.C. § 30102(a)(6) which provides that a motor vehicle "means a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways, but does not include a vehicle operated only on a rail line.”
See
49 U.S.C. § 30102(a)(6);
see also, In re Green,
. See, e.g., In re Wright,
. The parties’ stipulation pegs the total amount financed at $28,383.01, $24.49 more than my computation. For today, the difference is noted but immaterial. It can be dealt with when Bank of America’s secured and unsecured claims are liquidated.
. The plan originally proposed a rate of 6.75%, but the parties have now agreed, pending resolution of the instant controversy, that the secured claim will be paid at 8.0%. The balance of the bank's contract claim will be treated as unsecured.
. The hanging paragraph presents unique interpretive challenges. To begin, it "hangs” without ordered designation and without immediately surrounding context. The legislative history is unilluminating.
See In re Quick,
"But though I shout the wisdom of the maps, I am a salmon in the ring shape river.”
Tim Buckley, Starsailor, on Starsailor (Rhino Records 1991)(1970).
. Application of the dual status rule gives way to the possibility of variety in the treatment of payments between the sale and the filing. The
Pajot
court, for example, evaluat
*220
ed dual status payment allocation methods and chose to allocate payments under the dual status rule "proportionally, according to the ratio of the non-purchase money portion to the total amount financed.”
In re Pajot,