David Mark Childers and Mary N. Childers

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
DAVID MARK CHILDERS
MARY N. CHILDERS
DEBTORS
CASE NO.
07-02332-5-ATS
ORDER DENYING OBJECTION TO CONFIRMATION
The matter before the court is the objection to confirmation filed by CitiFinancial Auto
Corporation. A hearing took place in Raleigh, North Carolina on March 18, 2008.
David Mark Childers and Mary N. Childers filed a petition for relief under chapter 13 of the
Bankruptcy Code on October 17, 2007. 	CitiFinancial holds a lien on the debtors' 2004 Dodge
Intrepid, securing a debt in the amount of $11,988.11. The Childers' chapter 13 plan proposes to
treat CitiFinancial as secured in the amount of $6,875, with the balance to be treated as unsecured.
The Intrepid was acquired within 910 days of the filing of the petition, and CitiFinancial contends
that its claim cannot be bifurcated pursuant to the "hanging paragraph" of 11 U.S.C. § 1325(a). The
debtors contend that the vehicle was purchased for Mr. Childers' business use, and the "hanging
paragraph" does not apply.
SO ORDERED.
SIGNED this 19 day of March, 2008.
________________________________________
A. Thomas Small
United States Bankruptcy Judge
____________________________________________________________
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The "hanging paragraph" is an unnumbered provision that was added to the end of § 1325(a)
by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119
Stat. 23, § 306 (April 20, 2005) ("BAPCPA"), and has been the subject of many court decisions
interpreting its meaning. The "hanging paragraph" provides:
For purposes of paragraph (5) [of § 1325(a)], section 506 shall not apply to a claim
described in that paragraph if the creditor has a purchase money security interest
securing the debt that is the subject of the claim, the debt was incurred within the
910-day preceding the date of the filing of the petition, and the collateral for that debt
consists of a motor vehicle (as defined in section 30102 of title 49) acquired for the
personal use of the debtor . . . .
11 U.S.C. § 1325(a) (2005).
Several courts have concluded that "personal use" means "non-business use," and this court
agreed with that interpretation in In re O'Blenes, Case No. 07-2484-5-ATS (Bankr. E.D.N.C. March
7, 2008). See also In re Solis, 356 B.R. 398, 409 (Bankr. S.D. Tex. 2006), and cases cited therein.
However, "there is no guidance in the statute concerning what percentage of business use (less than
100%) would disqualify the vehicle as a 910 Vehicle." Solis at 409. The Solis court held that if the
personal use is "significant and material," then the hanging paragraph applies, "regardless of whether
there is also some business use." Solis at 409.
Mr. Childers testified that he sells life insurance, and his sales are conducted exclusively at
the homes of his clients. His clients are mostly within a one-hour radius of his home, and he drives
extensively for work. He testified that he purchased the Intrepid in 2005 to replace his previous
vehicle because a reliable car is necessary for his work. Mr. Childers testified that he takes his son
to school every day on his way to see his clients, and he does occasionally run errands in the
Intrepid, either while he is out of town on business or on his way home. The Childers family did
use the Intrepid on one family vacation, but family vacations and other family outings are somewhat
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rare given their financial situation. Mr. Childers claims his mileage as a business expense for tax
purposes, and he estimated that 90 percent of his annual mileage is attributable to his business.
The court finds that the Intrepid is used for business purposes, and the personal use of the
vehicle is incidental to Mr. Childers' business, not significant and material. 	Accordingly, the
hanging paragraph does not apply, and the objection to confirmation is DENIED.
SO ORDERED.
END OF DOCUMENT
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