Attorneys can do a powerful work-over through chapter 13

If you have a vehicle loan, you may dread the payments each month. Each time you write that check, you dread the dent it will put in your already fragile bank account. But what if one of the competent and qualified bankruptcy attorneys in the DFW metro area could tell you that a chapter 13 bankruptcy could help you to significantly change the way your car loan is set up? What if they could tell you that you could get a reduction in principle in a way that the auto lender is forced to accept the new balance on the vehicle as the current value of the vehicle?

Would you choose to do a bankruptcy cram down if you had the chance? Most would almost seem crazy not to take the bankruptcy law firm up on this offer. But there are some qualifications and some draw backs to a cram down. We’ll explain.

First, there are some requirements in order to do a cram down. One requirement is that there cannot be a situation where the debtor is paying 100% plan. Paying 100% plan in a bankruptcy means that there is no discharge of debt, but rather the debtor is paying all of the debt back through the ch. 13 bankruptcy repayment plan. Another requirement is that the debtor must have had the auto loan for a period of 2.5 years. If the debtor has not owned the vehicle this long, then they will not qualify for the cramdown in the ch. 13 plan.

Another drawback of the ch. 13 cram down is that if you are already in a payment that you cannot afford, and you’re simply cramming down a vehicle’s auto loan balance from $25,000 down to $15,000 for example, you still may not be in the right vehicle. If you are in a vehicle that is not appropriate and is not affordable, then cramming it down may only partially handle the required financial restructuring in your life.