AmeriCredit Financial Services, Inc. v. Penrod (In re Penrod)
- Summarized by T. Malpass , Law Offices of T. Edward Malpass
- 13 years 10 months ago
- Citation:
- In re Marlene A. Penrod, Ninth Circuit Case No. 08-60037
- Tag(s):
-
- Ruling:
- Ruling: Denial of request for en banc rehearing.
- Procedural context:
- Procedural status: Denial of en banc rehearing and dissent from denial of rehearing.
- Facts:
- Facts:
The reported matter is a written dissent by four Ninth Circuit Judges from a decision to deny rehearing en banc of a Ninth Circuit Panel's decision to uphold a BAP decision affirming confirmation of a Chapter 13 plan which stripped down a car purchase loan which combined the purchase price for a new vehicle with a "negative equity” payoff of the Debtor's loan on the vehicle she traded in. The Ninth Circuit Panel had affirmed the BAP's decision to uphold confirmation of a Chapter 13 plan which treated the negative equity payoff part of the car loan as unsecured debt.
The dissent points out that the decision is at variance with the other eight Courts of Appeal, which have treated a negative equity payoff as part of the purchase money security interested protected from stripdown by BAPCPA.
Judge Bea, who wrote for the dissenting Judges, pointed out that the decision to uphold the stripdown plan appeared to be contrary to the wording of Section 1325, as modified by BAPCPA, and was also against Congressional intent and based on an unsupportably narrow reading of the Commercial Code provision delineating the scope of what constitutes a purchase money security interest. Judge Bea also discussed the numerous Bankruptcy Court and Appellate decisions, including the eight Court of Appeals decisions, holding that the negative equity payoff was part of the value given for the new vehicle and properly treated as part of the protected purchase money security interest position.
In addition to lamenting the decision to deny en banc rehearing as keeping the Ninth Circuit "on the wrong end of an 8 to 1 Circuit split," the dissent asks "[w]ould anyone extend this line of credit and pay off the buyer's negative equity in her old car if he could not get a purchase money security interest . . . in the total amount of debt he assumed? Not if he wanted to stay in business."
As the dissenting Ninth Circuit Judges noted, the Panel decision has the potential to affect thousands of car purchase transactions and will apparently need to be resolved by the Supreme Court as a result of the Circuit split.
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