In re Donnadio, No. 19-8004 (6th Cir. 2019)
Annotate this CaseIn March 2017, Debtor purchased a vehicle with Creditor-provided financing. In July 2018, Debtors filed a chapter 13 bankruptcy petition and proposed plan. The proposed plan did not treat any claims in Section 3.2 (Request for valuation of security, payment of fully secured claims, and modification of under-secured claims), but treated Creditor’s “910” claim (a claim relating to a vehicle loan initiated less than 910 days earlier) in Section 3.3 (Secured claims excluded from 11 U.S.C. 506). The plan listed the claim as secured by the vehicle, valued it at $10,000, and provided for monthly plan payments to Creditor. Unlike Section 3.2, Section 3.3 does not discuss lien retention for claims. The plan did not have a nonstandard plan provision in Section 8.1 concerning the retention of Creditor’s lien. Creditor filed its Claim and objected to the confirmation of Debtors’ proposed plan, contending that it did not provide that Creditor would retain its lien on the vehicle until Debtors either paid their debt in full under nonbankruptcy law or received their discharge under section 1328. The bankruptcy court overruled the objection. The Sixth Circuit Bankruptcy Appellate Panel reversed. An objection to confirmation must be sustained when a chapter 13 plan fails to provide that the holder of a 910 claim retains the lien securing its claim until the earlier of payment of the underlying debt determined under nonbankruptcy law or discharge under section 1328.
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