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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

Can you 'Cram-Down' a Car in Chapter 13 Bankruptcy?

[fa icon="clock-o"] June 8, 2012 [fa icon="user"] David L. Stevens [fa icon="folder-open'] Bankruptcy, Chapter 13

chapter-13-bankruptcyModifying a Car Loan with Chapter 13 Bankruptcy

A Debtor filing a chapter 13 bankruptcy has a lot of tools available to give the him or her some breathing room. One area in which relief can be achieved is by modifying the claims of secured creditors. Normally we modify home mortgages. However, an automobile that was purchased more than 910 days before the filing of bankruptcy can be modified as well. The amount the lienholder will be paid can be reduced to the fair market value of the automobile and the rate and length of repayment can be stretched out over five years. 11 U.S.C. § 1325(a)(5)(B)(ii);see In re Pryor, 341 B.R. 648; In re Brill 350 B.R. 853; In re Wright, 338 B.R. 917.

In many cases, not having a large monthly car payment outside of the plan is essential for a successful reorganization. There are pitfalls to modify claims, such as what happens if the chapter 13 plan is not successfully completed. Experienced bankruptcy counsel is essential to putting together a plan that is likely to work.

If you need consumer debt defense, speak with a New Jersey Chapter 13 bankruptcy attorney contact us today.

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