Can Chapter 13 change my car loan or car payments?
Yes, if you meet certain requirements. It is Chapter 13 that can help you if you are behind on your car payments or if the lender is threatening to repossess your car. However, even if you are not behind on your car payments, but purchased your car more than 910 days prior to the date of your bankruptcy, Chapter 13 can modify your car payments with what is called a "cram down." A cram down is where you pay the lender only what the vehicle is worth (plus reasonable interest), not the amount that you owe for the car. This is helpful when the car is worth less than what is owed. For example, assume a client's car is worth $8,000 but the debt is $19,000. In a Chapter 13, this client may get to keep the car by paying $8,000 for it. The remaining balance of $11,000 is discharged, provided you successfully complete the Chapter 13 plan. The Carmichael Firm can design a Chapter 13 plan, with your help, that will correctly value your vehicle and propose a reasonable payment for that vehicle. Please be aware that you cannot reduce the car debt to the car value unless you purchased your car more than 910 days before your bankruptcy petition date, or if the vehicle was purchased for business use, regardless of the purchase date.