Peaslee v. GMAC, LLC

CALABRESI, Circuit Judge:

The underlying question in this case is whether the portion of an automobile retail instalment sale obligation attributable to a trade-in vehicle’s “negative equity” (ie., debt owed above and beyond the current collateral value of the traded-in vehicle) should be considered part of the purchase-money security interest (“PMSI”) arising from the sale of a vehicle, and therefore protected from cramdown by the “hanging paragraph” of Section 1325 of the Bankruptcy Code. The answer to this federal question depends on the construction of the term “purchase-money obligation”…