IN RE WRIGHT
492 F.3d 829 (2007)
NATURE OF THE CASE: Wright (P) appealed an order that denied their proposed Chapter 13
plan.
FACTS: Wright (P) obtained a purchase-money automobile loan from Santander (D) fewer than
910 days before they filed their bankruptcy petition. The contract between P and D stated
that if the debt was not paid, D could take the car and sell it. D was to account for any
surplus and P was liable for any deficiency from the sale. The loan was a secure loan with
recourse. The contract also stated the parties enjoyed all rights under UCC 9-615(d)(2)
wherein the obligor must satisfy any deficiency in the collateral’s value if sale resulted
in an amount due. P owed more than the car was worth. P filed Chapter 13 and wanted to
surrender the car and walk away. P argued that under Section 1325(a), a lender could not
separate the loan into secured and unsecured parts. Thus surrender of the car would satisfy
D’s obligation in full. Taking the minority position on the effect of bypassing § 506, the
bankruptcy judge declined to approve the Chapter 13 plan, because P did not propose to pay
any portion of the shortfall. P appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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