Tavere

Free Case Evaluation

510-255-4646
  • Home
  • About Firm
  • Practice Areas
  • Testimonials
  • Attorney
  • Blog
    • Chapter 7 Bankruptcy
    • General Bankruptcy
    • Chapter 13 Bankruptcy
    • Bankruptcy Law
    • Bankruptcy News
    • Types of Debt in Bankruptcy
      • Bay Area Bankruptcy Attorney
  • Contact Us
Stop Worrying About Your Debt

A Better Tomorrow

Starting Today

Stop Worrying About your Debt.
Call us Now to Take the First Step.

Click Here
Millions in debt discharged for our clients

Real Concern

Real Help

Millions in debt Discharged
For our Clients. Call Today, let us Help!

Click Here

Chapter 13 Bankruptcy and Your Car

wpadmin on October 25, 2013 Posted in Chapter 13 Bankruptcy

Chapter 13 bankruptcy has several tools to help persons who are struggling or unable to make payments on their car loans. For many Americans, a house and a car are two of the most valuable possessions they will ever own. A recent article from Bloomberg news reports that lenders today are allowing buyers to borrow more money relative to the cost of their car than several years ago, even for those with poor credit. However, having a large auto loan or a loan with a high interest rate can pose problems for some. If you are behind on your payments or have a car loan with negative equity, known as an “upside-down” or “underwater” loan, Chapter 13 Bankruptcy may be able to help you.

Cramdowns and Cars.

Lien stripping, also known as “cramming down” a lien, is a tool to help Chapter 13 Bankruptcy filers to get rid of some debt they owe on an asset, such as a house or a car. A recent post on this blog discussed cramdowns and real estate and showed how Chapter 13 bankruptcy can help homeowners who are upside-down on their mortgage by stripping away a second, or even a third, mortgage. Cramdowns under Chapter 13 Bankruptcy can also help reduce the debt owed on a car.

In 2005, the Bankruptcy Code was amended to limit the use of cramdowns with auto loans. Today, a person who files Chapter 13 bankruptcy can only cram down an auto loan on a car purchased more than 910 days before the filing. Because cars depreciate by several thousand dollars when they are driven from the dealer’s lot and then continue to depreciate rapidly over the first period of the auto loan, the 910-day rule may stop some Chapter 13 Bankruptcy filers from cramming down the loan when it is most helpful to them. However, even after the 910 day period, it is still possible for some debtors to be upside down on an auto loan. For these debtors, lien stripping is still a powerful tool to help make a crippling auto loan more manageable.

Chapter 13 Reasonableness Standard.

The Chapter 13 reasonableness standard may prevent some filers from keeping their cars, particularly if the car is a luxury model or if the Bankruptcy Court views the auto payment as an unnecessary expense. Chapter 13 bankruptcy requires the debtor to use all of their disposable income to pay their unsecured debts. This is sometimes referred to as the “best effort” requirement. To determine disposable income, a Chapter 13 filer fills out Form 22C, which asks them for details about their income and the amount that they are required to pay their secured creditors, including the company which holds their auto loan. A judge may decide that a large monthly payment on a luxury car is an unnecessary expense, whereas a lower priced car may be viewed by the judge as reasonably necessary.

Automatic Stay

Another protection that Chapter 13 Bankruptcy can offer is the automatic stay. An earlier blog post discussed how automatic stays can help stave off imminent home foreclosures. Automatic stays can also help keep a car from being repossessed, if you are behind on your car payments. When a debtor files for bankruptcy (either Chapter 7 or Chapter 13), the automatic stay is self-executing and immediately goes into effect under section 362 of the Bankruptcy Code.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code

Recent Posts

  • What Can You Do if You Cannot Keep Up With Chapter 13 Bankruptcy Plan Payments?

    If you filed for Chapter 13 bankruptcy but are struggling to keep up with the payments outlined in your debt repayment plan, you may not kn

    category : Bankruptcy Law, Blog

  • What is a Means Test and How Does it Work?

    When considering filing for bankruptcy, one of the most important steps is the means test. This test evaluates your financial situation to

    category : Bankruptcy Law, Blog

  • When Should I Stop Using My Credit Card Before Bankruptcy?

    Filing for bankruptcy is a difficult decision and one that should not be taken lightly. But if you have already made the decision to file,

    category : Bankruptcy Law, Blog

  • Can Filing for Bankruptcy Stop an Eviction?

    Facing eviction can be a stressful and difficult experience. If you are considering filing for bankruptcy to stop an eviction, there are ce

    category : Bankruptcy Law, Blog

search this year

  • February 2023
  • January 2023
  • Search by Year

  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • img

    Quick Links

    • Bay Area Bankruptcy Attorney
    • About Firm
    • Practice Areas
    • Attorney
    • Communities Served
    • FAQ
    • Disclaimer
    • Contact Us

    Follow Us

    • Facebook
    • Twitter
    • Google
    • Yelp

    Contact Us

    • Oakland Office

      1300 Clay St. Suite 600
      Oakland, CA 94612

    • Hayward Office

      24301 Southland Dr.
      STE. 310
      Hayward, CA 94545

    • 510 255 4646

    We serve the following localities: Alameda County, Alameda, Berkeley, Castro Valley, Fremont, Hayward, Livermore, Oakland, San Leandro, Union City, Contra Costa County, Antioch, Brentwood, Concord, Martinez, Pittsburg, Richmond, Walnut Creek, San Francisco County, San Francisco, Albany, Ashland, Dublin, Emeryville, Newark, Pleasanton, San Lorenzo, and Alamo.


    The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code


    Alameda County Bankruptcy Lawyer Melanie Tavare Home | Contact Concord, California Foreclosure Defense Attorney Melanie Tavare

    2022 © Copyright law office of Melanie Tavare