In the recent case of In re Rice, 2007 WL 781893 (Bkrtcy. E.D.Pa. 2007) the Chapter 7 debtor claimed her 2000 Mitsubishi Galant, secured by a loan from National Auto Finance Company, as exempt pursuant to 11 U.S.C. § 522(d)(2) and (5). The Debtor filed a Statement of Intention asserting that the car was exempt, and then later amended her intentions to reflect that she intended to redeem the car. The lender objected to the motion to redeem based on valuation.

In an Amended Motion to Redeem and Determine Rights in Property and her accompanying Memorandum of Law, the Debtor argued that the lender had no right to repossess the car because she was making regular post-petition payments. In other words, the Debtor argued that, because her post-petition payments were accepted by the lender, she had chosen the ride-through option sanctioned by the Third Circuit.

The court, however, disagreed and held that BAPCPA eliminated the ride-through option previously in place in the Third Circuit. In noting his disappointment, debtor counsel Henry Sommer pointed out that the loss of the ride-through option does not necessarily forestall a debtor’s rights under state law; the Rice court simply found that there was no federal right to keep and pay but did not address the state law claim that the creditor waived the default by accepting post-petition payments.

Sommer went on to state the he continues, “to be amazed at the extent the American auto makers seem to want to alienate their few remaining loyal customers, unlike the Japanese, who treat their customers much better in this situation.” In fact, consumer bankruptcy attorneys have found that foreign car companies have proven to be more amenable to accepting the ride-through option. Apparently American car companies are not content with making money from a continued revenue stream and prefer to “eat steel.”