Dear Steve,
It is neither 790, nor 970. In the hanging paragraph immediately following 1325(a)(9) we learn that it is 910:
For purposes of paragraph (5), 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 period 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, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing.
Thus, there are three types of secured debts that cannot be modified in a Chapter 13 plan:
(1) a loan secured only by the debtor's principal residence ( 1322(b)(2));
(2) a loan secured by a motor vehicle that was purchased during the 910-day prepetition period (the above hanging paragraph); and
(3) a loan secured by anything that was purchased during the one-year prepetition period (the above hanging paragraph).
Any other secured debt can be modified in a Chapter 13 plan pursuant to 1322(b)(2). However, unless the creditor agrees otherwise, the entire amount of the modified debt must be paid in full over the plan pursuant to 1325(a)(5)(B)(ii). It is for this reason that not many Chapter 13 debtors modify mortgages that are secured by rental property. Of course, the modified balance on a 910-car will probably be small enough that it will not create an insurmountable hurdle to the debtor.
Nick
Nicholas Gebelt, Ph.D., J.D.
Board Certified Bankruptcy Specialist
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