In Re George H. Mitchell Carol J. Mitchell, Debtors. General Motors Acceptance Corporation v. George H. Mitchell Carol J. Mitchell

General Motors Acceptance Corporation (GMAC) appeals from the decision of the Bankruptcy Appellate Panel (BAP) which established the value of an automobile owned by George H. and Carol J. Mitchell. The purpose of the valuation was to determine the amount of GMAC’s allowed secured claim in the Mitchells’ Chapter 13 cram-down bankruptcy plan. A careful reading of the statutory language involved here, 11 U.S.C. § 506 (a), and the overwhelming weight of authority support the outcome reached by the BAP. We affirm its use of the wholesale blue book valuation. We also affirm the BAP’s holding that GMAC did not have a security interest in the mechanical service agreement the debtors had purchased with the car.

FACTS

On January 14, 1987, the Mitchells bought a 1987 Cadillac El Dorado, paying $5,000 down and signing a conditional sale contract under which they agreed to pay the remaining $26,940 plus interest at a rate of 11 percent annually in 60 monthly installments of $585. The purchase price included $695 for a 60-month, unlimited mileage, mechanical service contract under the General Motors Purchaser Protection Plan, a contract assumable by a subsequent purchaser of the car on…