Posted Oct 14, 2019

The Court found that there is nothing in the hanging paragraph of section 1325(a) that would lead it to conclude that the existence of a cross-collateralization clause in the security agreement between the debtors and the credit union GECU renders the hanging paragraph inapplicable. “The hanging paragraph of section 1325(a) has three requirements when the debt at issue relates to a motor vehicle. First, the creditor must have a purchase money security interest in the vehicle. Second, the debt must have been incurred within 910 days prior to the bankruptcy case. Third, the collateral for the debt must be a motor vehicle acquired for the personal use of the debtor. The debtors do not dispute that GECU has a purchase money security interest in the vehicle, that the vehicle was acquired for the personal use of the debtors, nor that the debt was incurred within 910 prior to the debtors filing this case. The debtors argue that because the vehicle is subject to cross-collateralization, meaning that the vehicle may serve as collateral for other obligations of the debtors to GECU, the hanging paragraph does not apply.” Case Number: 19-13895 Judge Name: EPK, Case Name: ROBINSON AND DELPH-ROBINSON, Sign Date: 10/04/2019.