As a general rule the U. S. Bankruptcy Code protects car lenders. A Chapter 13 Bankruptcy plan must accommodate the car lender in one of three ways: 1) obtain the lender’s acceptance of the plan; 2) return the car to the lender; or 3) make the loan payments either through the Chapter 13 Case, or directly to the lender.
There is one exception, however, relating to what the Bankruptcy Code calls a non-“910 Vehicle”. If your car loan was closed at least 2.5 years prior to the filing of the bankruptcy case, and the vehicle has negative equity, you can stripdown the lender’s lien and reduce the car payments. For example, if your vehicle has a market value of $ 10,000.00, but you owe $ 15,000.00 on the car loan, you can reduce the loan down to $ 10,000.00. We can also reduce the interest rate to a rate known as the Till Rate. Then you can pay off the entire loan over a sixty (60) month Chapter 13 plan while receiving the benefit of making lower car payments.
The Law Offices Of Todd S. Frankenthal assists clients in financial distress to get a fresh start. The law firm has offices in West Palm Beach, Boca Raton, and Fort Lauderdale.
