Section 6.16 Purchase-Money Security Interests

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

3. (§6.16) Purchase-Money Security Interests

A transfer of a security interest to secure an “enabling loan” is protected under 11 U.S.C. § 547(c)(3). Under this exception, if a security interest is made to secure a loan that enables the debtor to acquire the collateral, the transfer is not avoidable if perfected within 30 days after the debtor receives possession of the property. Section 547(c)(3). For cases filed before October 17, 2005, the security interest must have been perfected within 20 days after the debtor receives possession. This defense is not available to refinancing creditors. In re Brown, 226 B.R. 39 (W.D. Mo. 1998) (§ 547(c)(3) not available to lender that advanced funds to pay off purchase-money lender and failed to...