Glenn Stearns, Chapter 13 Trustee for the Chicago Suburbs (the “collar counties”) recently pointed out that creditors holding revolving charge accounts (department store credit cards are a classic example) frequently file claims as general unsecured creditors despite the fact that
- cardholder agreements may give rise to a non-possessory purchase money security interest, and
- section E3 of the chapter 13 plan now in use allows such claims to be characterized as secured
As a result the creditor may receive more in so-called adequate protection payments than they would in the form of a general distribution or dividend to unsecured creditors. Examples of creditors falling into this category include Best Buy, Circuit City, Home Depot, and Harlem Furniture.