Glossary

The 910-Day Rule

Written by JaredLast reviewed 2026-08-24

What is the 910-day rule?

The 910-day rule is shorthand for an unnumbered paragraph BAPCPA added to the end of 11 U.S.C. § 1325(a) in 2005, and it does one specific thing: it stops a Chapter 13 plan from cramming a qualifying car loan down to the vehicle's value. Congress inserted it through Pub. L. 109-8, § 306(b) — the Bankruptcy Abuse Prevention and Consumer Protection Act — effective for cases filed on or after October 17, 2005. A related technical amendment in 2010, Pub. L. 111-327 § 2(a)(44)(A), inserted the word "period" after "910-day," which is why some older commentary spells it slightly differently without changing what it does.

It's called the "hanging paragraph" because it sits at the end of § 1325(a), right after paragraph (9), without its own letter or number — it just hangs there instead of living inside a numbered condition. Its reach is not open-ended, though: its own first words are "For purposes of paragraph (5)," the confirmation requirement that governs how a plan must treat an allowed secured claim. The missing number is a drafting quirk, not a substantive detail, but it's why practitioners and courts refer to "the hanging paragraph" instead of citing a specific subsection letter.

What does "cramdown" mean, and why would a lender want to block it?

Cramdown, in this context, means splitting a secured claim in two under 11 U.S.C. § 506(a): the secured portion is capped at the collateral's value, and anything the debtor still owes above that gets treated as an unsecured claim — the kind a Chapter 13 plan often pays only a fraction of. For a car loan, that split can matter a lot. A borrower who financed a vehicle with little or no down payment, rolled in fees, or bought at a high rate can owe more than the car is worth almost immediately after driving it off the lot. Without the hanging paragraph, that borrower's Chapter 13 plan could pay the lender only the car's current value and discharge the rest as an unsecured debt.

The hanging paragraph blocks exactly that outcome for qualifying loans by making § 506 not apply to the claim at all. No split happens. The full remaining balance has to be treated as a secured claim and paid through the plan, generally at whatever interest rate the plan uses for secured debt, regardless of what the car is currently worth. That's a meaningful difference for a lender and an equally meaningful one for a debtor deciding whether to keep a car or let it go in the case.

What does the hanging paragraph actually say?

Here's the operative text, verified against the U.S. Code as published by Cornell's Legal Information Institute:

> "For purposes of paragraph (5), section 506 shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the 910-day period preceding the date of the filing of the petition, and the collateral for that debt consists of a motor vehicle (as defined in section 30102 of title 49) acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing."

The cross-reference matters: "motor vehicle" isn't defined inside the Bankruptcy Code itself. It borrows the definition from 49 U.S.C. § 30102(a)(7), which defines a motor vehicle as "a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways," excluding anything "operated only on a rail line." That's a broad, ordinary definition — it doesn't turn on make, model, or age, only on how the thing was built and where it's meant to run.

What three conditions must all be true for it to apply?

All three of these have to be true at once, not just one or two, for the hanging paragraph to block cramdown on a claim:

Drop any one of the three and cramdown is back on the table for that claim. A loan taken out 950 days before filing misses the timing condition. A lien added after the purchase, securing debt that wasn't used to buy the car, misses the purchase-money condition. A commercial delivery van bought mainly for a debtor's business misses the personal-use condition, though it may still qualify under the separate 1-year window described below. Each condition is a genuine, independent gate — a claim can fail on just one and lose the protection entirely.

Does rolled-in negative equity still count as purchase-money debt?

This is unsettled, though lopsidedly so — one circuit stands against eight, with no Supreme Court decision resolving it — and it turns partly on a wrinkle in how "purchase money security interest" works: the term isn't defined anywhere in the Bankruptcy Code, so courts borrow the definition from state law, almost always a state's version of UCC Article 9. That matters because it's common for a car loan to roll in "negative equity" — the amount still owed on a trade-in that's worth less than what's owed against it — along with the new vehicle's price, taxes, and fees into a single loan balance.

Courts disagree about whether that rolled-in negative equity is part of the "purchase money" debt the hanging paragraph protects, or a separate, unprotected piece of financing tacked onto it. Eight circuits have held it is part of the protected purchase-money debt: the Second, in In re Peaslee, 585 F.3d 53 (2d Cir. 2009), after the New York Court of Appeals answered a certified question on the state's UCC; the Fourth, In re Price, 562 F.3d 618 (2009); the Fifth, In re Dale, 582 F.3d 568 (2009); the Sixth, In re Westfall, 599 F.3d 498 (2010); the Seventh, In re Howard, 597 F.3d 852 (2010); the Eighth, In re Mierkowski, 580 F.3d 740 (2009); the Tenth, In re Ford, 574 F.3d 1279 (2009); and the Eleventh, In re Graupner, 537 F.3d 1295 (2008). The Ninth Circuit is the outlier: it held in In re Penrod, 611 F.3d 1158 (9th Cir. 2010), affirming the bankruptcy court and its Bankruptcy Appellate Panel, that negative equity falls outside the purchase-money definition and is therefore subject to cramdown.

Because the underlying question is a matter of state contract and commercial law as much as federal bankruptcy law, the same fact pattern can come out differently depending on which state's UCC language governs the loan — not just which circuit hears the case. Anyone whose loan included a rolled-in trade-in balance should raise this specifically with their bankruptcy attorney rather than assume either outcome.

What happens with collateral other than a personal-use vehicle?

The same hanging paragraph protects other purchase-money debt too, just on a shorter clock: 1 year before filing instead of 910 days, and with no vehicle-or-not distinction. The statute's own language covers this in the clause right after the motor-vehicle test — "any other thing of value" financed with a purchase-money security interest within the year before filing gets the same protection from cramdown that a personal-use vehicle gets within 910 days.

This second clause is also where a vehicle that fails the personal-use test usually lands, though that reading is a majority position among bankruptcy courts rather than settled law. A pickup truck bought mainly to run a debtor's landscaping business isn't "acquired for the personal use of the debtor" in the sense the first clause requires; most courts then treat it as "any other thing of value" and apply the 1-year window instead of the 910-day one. A minority read the paragraph as covering motor vehicles only through the personal-use clause, which would leave a business-use vehicle outside the hanging paragraph entirely and open to cramdown at any age. There is no circuit-level rule settling this, and no reported figure for how the districts divide.

Whether a given vehicle was "acquired for the personal use of the debtor" is itself decided case by case — courts commonly apply a totality-of-the-circumstances test rather than a bright line, and commuting to a job is not automatically personal use in every court.

For how a Chapter 13 plan handles new financing taken out after a case is already open — a different question from whether an existing loan is protected from cramdown — see can you buy a car while your Chapter 13 case is open. Chapter 7 works differently still, since it has no repayment plan for a claim to be crammed down within; a Chapter 7 filer instead chooses among reaffirming, redeeming, or surrendering a financed vehicle, covered in can you keep your car without reaffirming.

This is general information about how the hanging paragraph works, not legal advice for a specific loan or case. Whether a particular debt meets all three conditions is a factual question for the attorney and trustee handling that case.