In Re Wright

492 F.3d 829 (2007)


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 secured 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.