As many of you are aware, courts are divided over the effect of a surrender of a “910” motor vehicle in Chapter 13. A majority of courts allow the auto finance creditor to file an unsecured claim for the deficiency. A minority of courts provide the surrender is in full satisfaction of the debt.
Colorado has joined the majority by virtue of the decision of In re Ballard, 526 F.3d 634 (10th Cir. 2008), which was announced May 19, 2008. This positive creditor’s decision reversed several lower court rulings adverse to the auto finance industry.
The 10th Circuit includes Colorado, Oklahoma, Kansas, New Mexico, Wyoming and Utah. Please adjust your Chapter 13 procedures to ensure a deficiency claim is filed in a 910 surrender case.