6th Cir. Says Negative Equity Is Part Of Vehicle’s PMSI, Not Subject to Cramdown

The U.S. Court of Appeals for the Sixth Circuit joined the Second, Fourth, Fifth, Seventh, Eighth, Tenth, and Eleventh Circuits in holding March 24 that a Chapter 13 debtor’s negative equity in a vehicle can be a part of a purchase money security interest and, if secured, is not subject to cramdown (Nuvell Credit Corp. v. Westfall (In re Westfall)).

Judge Deborah L. Cook reversed the district court’s judgment, which affirmed the bankruptcy court’s order overruling a creditor’s objection to confirmation of the debtors’ Chapter 13 plan, and remanded the case to the bankruptcy court for further proceedings. ...