In the Chapter 13 Bankruptcy case Everetts, Bradley R. and Ruby J.; In re the debtors’ objection to a creditor’s proof of claim as a secured creditor is rejected by the bankruptcy court.
The details of the bankruptcy case:
The debtors financed an in-ground pool kit and defaulted on the debt. When the debtors filed Chapter 13 bankruptcy, they treated the creditor as unsecured. But the bankruptcy court found that although the in-ground pool kit had been installed on the debtors’ property it was still subject to the creditor’s lien.
Judge Guy R. Humphrey said:
That the pool kit became a fixture when it was installed as part of the debtors’ in-ground swimming pool did not defeat the lien because “ORC § 1309.334(A) provides that collateral securing a PMSI in consumer goods that become a fixture remain subject to the security interest of the creditor if the collateral does not consist of ‘ordinary building materials.'”
The bankruptcy court ruled that the pool kit was not ordinary building materials therefore the creditor’s claim was secured. This case is important to note for debtors who have financed luxury additions to their primary residence. If, for example you have financed a swimming pool and the bankruptcy court claims it is secured, if it is a high enough amount it could affect the feasibility of your Chapter 13 bankruptcy plan. Make sure that your bankruptcy attorney is aware of any additions to your primary residence that were financed and might be claimed as a secured debt.