The term “cramdown” allows a debtor who owns a vehicle that is worth less than what is owed on it to reduce the balance and interest rate on the car loan.  It is far too common for individuals to end up with a car loan balance that is greater than what the car is worth.  In a chapter 13, you can propose that the lender of the vehicle receive only that value of the car instead of the entire amount owed due under the loan.  For example, you owe $20,000 on your car and it is only worth $10,000 now, you can claim that the lender only has $10,000 that is secured. So, if the lender were to repossess you vehicle, the lender would only receive $10,000.  Therefore, the remaining balance of the loan should be $10,000, treated as unsecured claim.

There are restrictions on a vehicle cramdown.  First, a vehicle cramdown is only available in a Chapter 13 bankruptcy.  Second, the vehicle must be for personal use.  Third, the vehicle must have been purchased at least 2 ½ years (910 days) before filing for bankruptcy.  Lastly, the loan must be more than the fair market value of the vehicle.

The debtor may also ask to reduce a high interest rate, or change the number of months for repayment.  However, the interest rate and payment time may still be adjusted to a court-ordered interest rate, called the “Till rate” so named after the U.S. Supreme Court case, Till v. SCS Credit Corp., 541 U.S. 465 (2004).  The Till rate is often less than the debtor’s original interest rate, and lowers the monthly payment.  Vehicle debt for many Chapter 13 debtors is paid at the Till rate over the course of the bankruptcy case.

If you want to know if you qualify for a cramdown in a Chapter 13 bankruptcy, contact the Wright Law offices with offices located in Avondale, Phoenix, and Scottsdale.

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    • Phoenix Office – New
      Wright Law Offices 
      2999 N. 44th St., Ste 250
      Phoenix AZ 85018 

      Telephone: 602-456-6085 / 866-703-3287
      Phoenix Law Office

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      Wright Law Offices 
      668 N. 44th St., Ste 320
      Phoenix AZ 85008 

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      7135 East Camelback Road, Ste 230
      Scottsdale AZ 85251 

      Telephone: 480-845-0145 / 866-703-3287
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      2238 S. McClintock Dr.
      Tempe AZ 85258 

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      12725 W Indian School Rd, Suite E-101
      Avondale AZ 85392 

      Telephone: 623-258-4480 / 866-703-3287
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      4856 E. Baseline Rd.
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      Mesa, AZ 85206
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      20325 N. 51st Ave., Suite 134
      Glendale, AZ 85308
      Telephone: 623-258-4480 / 866-703-3287
      Glendale Law Office

    What our clients are saying…

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    Mr. Wright and his staff were amazing. They made a negative situation a lot better and turned it into a positive. Could really tell they care helping people and I will refer their Phoenix Bankruptcy Attorney firm to friends and family. Thanks again.

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    I called around looking for the right bankruptcy lawyer and came across Benjamin Wright. He personally called me for the consultation seeing how I live in Kingman AZ. He was very helpful from the start and his staff was very friendly and explained any questions I had, sorry for all the questions. I would definitely recommend Wright law offices, and I do!! Thanks for everything, you made what seemed like a hard thing to do simple!! You guys rock!!!

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    Great lawyer, he really helped my mother out of a jam. She was totally new to bankruptcy and he talked with us for about an hour and a half to make sure she wouldn’t be worried.

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    I had a very positive experience with Attorney Wright. He or his staff returned my e-mails and calls promptly (even after business hours occasionally). His fees were reasonable. He was patient with me when I showed up in court missing an important document. He is aggressive, but fair and nice.

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