9th Cir. B.A.P.;
16-1218

The Bankruptcy Appellate Panel affirmed a judgment. The court held that the debtors' voluntary transfer of a security interest in their 1965 Corvette defeated their claim of exemption in the vehicle, and the creditor's failure to perfect that security interest defeated his claim as well.

Steven and Josephina Wharton owned a 1965 Corvette. In July 2011, Steven borrowed $80,000 from his brother Robert. Steven signed a promissory note stating that the Corvette was partial security for the loan. Steven gave Robert the original title certificate and keys to the vehicle but retained physical possession. Steven remained listed as the owner on the Corvette's title certificate, and Robert was not added as a lienholder. In 2014 the Whartons filed a Chapter 7 bankruptcy petition. Robert filed a proof of claim for $45,000, showing $40,000 secured by the Corvette with the remainder unsecured. The bankruptcy trustee demanded turnover of the vehicle, arguing that because Robert's security interest was not recorded on the certificate of title, it was not perfected under Nevada law. The Whartons amended their return to claim an exemption in the Corvette.