In this case, the debtor would receive the excess $5K (surplus) which he would use to satisfy the debts of his unsecured creditors (and then would have $3K left over). 2) The dealership repossess the car and sells it for less than the amount of the debt, let's say $9K (more likely scenario).
In this situation, the debtor gets the extra $5K (surplus), which he uses to pay off his unsecured creditors. He then has $3K left over. 2) The dealership takes back the car and sells it for less than the amount owed, likely around $9K.