Chapter 13 bankruptcy and a car loan cramdown
Florida residents who have filed for Chapter 13 bankruptcy might qualify for what is known as a loan cramdown on their car. The owners needs to be upside down on the loas. This means that they owe more on the car than the car is worth.
There are two other requirements for a cramdown. People must have owned the car for at least 910 days. Furthermore, the court-approved repayment plan must include future payments and any back payments. It is then necessary to renegotiate the loan and the financing agreement.
The advantage of a car loan cramdown is that it can save the car owner money. A cramdown will reflect the car’s fair market value rather than the negative equity amount. The owner might also be able to get a reduction in the interest rate. Furthermore, it may be possible to lower the monthly loan payment with a loan extension.
The decision to file for bankruptcy can be a difficult one, but in many cases, it can also be a relief. Once people file, creditors must cease contacting them. Chapter 13 bankruptcy is one way for individuals to file for bankruptcy and keep some of their assets. This may involve restructuring other payment plans, in addition to car loans, over a period of three to five years. Individuals may be struggling with debt for any number of reasons including job loss, the end of a relationship, illness or simply falling behind on payments. An lawyer may be able to discuss the various options for debt relief, and whether they would be a good candidate for bankruptcy. Bankruptcy may be less damaging to a person’s credit than continued debt and may offer a fresh start for people to begin rebuilding their credit.