Bankruptcy law has significantly changed in the last two years due to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). An already complex and challenging area of law, bankruptcy has become even more so, as debtors and creditors begin to question how their rights have changed. For courts, one of the most perplexing issues is whether the standards and interpretations that were established in preBAPCPA bankruptcy cases are still applicable today. As courts have examined the potential effects of the new legislation, different opinions have emerged, leaving even more uncertainty for interested parties. One of the specific uncertainties that has developed involves the interpretation of BAPCPA's so-called "hanging paragraph," which provides preferential treatment in the Chapter 13 bankruptcy process for automobile creditors with collateral-backed claims that have been outstanding for less than 910 days. While it is generally agreed that Congress inserted this provision to benefit these creditors, a significant debate has arisen as to what these benefits are supposed to be. In discussing the various interpretations of the hanging paragraph that have emerged, this Summary will demonstrate that a strong majority of courts have chosen to favor secured creditors, at the expense of debtors and unsecured creditors. Because this interpretation favors a small segment of the lending industry, and because it is inconsistent with BAPCPA's purpose, this Summary concludes that this majority view is mistaken.

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