Another benefit of a Chapter 13 bankruptcy is the auto loan "cram down" provision.
Under certain circumstances, the outstanding balance on a car loan can be reduced to its fair market value. This can be very beneficial to people who are "upside down" on their car loans and owe more than their car is worth. If your car loan is eligible for "cram down", your Chapter 13 plan payment, which addresses all of you financial issues, will sometimes be less than your current car payment. How does this happen? Since cars depreciate so quickly, it is not uncommon for you to owe more on the vehicle than it is actually worth. Chapter 13 bankruptcy offers relief to people who are in this situation. A Chapter 13 cram down allows you to modify your car loan and pay less than the balance owed on the loan.
For instance, if you owe $20,000 on a car, and its fair market value is determined to be $12,000, a Chapter 13 bankruptcy will allow you to strip $8,000 of the debt off of the balance of the loan and allow you three to five years to pay the remaining balance through your Chapter 13 plan.
If you have questions about auto loan cram downs and are considering bankruptcy, the attorneys at Harbour Law, PLC, are here to help. To determine if you are eligible for an auto loan cram down, it is important to consult with an experienced bankruptcy lawyer. We are committed to helping you reduce your stress. Call (757) 622-1621 or contact us online for a free consultation. It could be your first step on the road to debt relief.