Did you know that you can use Chapter 13 bankruptcy to reduce the debt owed on your car or truck, and you can reduce the interest rate to 4-5% or less?
The Bankruptcy Code allows you to use Chapter 13 cram down the debt owed on your motor vehicle to a figure equal to the value of that vehicle. This is especially valuable if you owe significantly more than your car or truck is worth.
However, not every Chapter 13 filer can use the cram down provision. The Code contains a trap if your vehicle loan originated less than 910 days (about 2 ½ years) from the date you filed your Chapter 13 case.
If your vehicle loan is less than 910 days old you will most likely end up paying the full balance of your loan with full contract interest. However, if your loan is more than 910 days old, we can usually reduce the balance due and reduce your interest rate. This cram down can save you thousands of dollars.
Before filing a Chapter 13 you should find and provide your loan paperwork for your vehicle to your attorney – if your loan is close to the 910 day deadline you will most likely want to wait to file.
If you have questions about the 910 day rule or bankruptcy cram-downs, please contact me at 770-393-4985.