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.
Financial Recovery With Chapter 13 Bankruptcy
At Wright Law Offices, our experienced team of Phoenix, AZ chapter 13 bankruptcy lawyers is here to guide you through the process.
If you’re facing mounting debts and you need a fresh financial start, Chapter 13 bankruptcy may be the solution you need to regain control of your financial life. In this listicle, we’ll explore what Chapter 13 bankruptcy is, and how our dedicated attorneys can assist you in securing a brighter financial future.
1. Understanding Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as “reorganization bankruptcy,” is designed for individuals with a regular income who want to repay their debts but need a structured plan. This legal process allows you to create a manageable repayment plan over three to five years, putting you back in control of your financial destiny.
2. Protection From Creditors
Filing for Chapter 13 bankruptcy provides an immediate halt to creditor harassment, wage garnishments, and potential foreclosure proceedings. With the protection of the bankruptcy court, you can breathe easier while working towards a debt-free life.
3. Customized Repayment Plan
Our Phoenix chapter 13 bankruptcy lawyers will work closely with you to create a personalized repayment plan that fits your budget and financial goals. This plan can include reduced interest rates and even the potential discharge of certain debts.
4. Asset Preservation
Unlike Chapter 7 bankruptcy, which may require liquidation of assets, Chapter 13 allows you to retain your property and assets while paying off your debts gradually. This makes it an attractive option for those with valuable assets they wish to protect.
5. Eligibility And Qualifications
To file for Chapter 13 bankruptcy, you must meet specific income and debt requirements. Our team at Wright Law Offices will assess your financial situation to determine your eligibility and help you understand your options.
6. The Bankruptcy Process
Navigating the legalities of Chapter 13 bankruptcy can be complex, but with our experienced lawyers by your side, you’ll have the guidance you need at every step of the process. From the initial consultation to the final discharge, we’ll ensure you’re informed and supported.
7. Debt Discharge
Upon successful completion of your repayment plan, you may be eligible for a discharge of remaining unsecured debts. This means you can move forward with a clean financial slate, free from overwhelming debt.
8. Rebuilding Credit
Rebuilding your credit after Chapter 13 bankruptcy is possible. Our team can provide guidance on how to responsibly manage your finances and rebuild your credit score for a brighter financial future.
Want To Get Back On Track? Contact Wright Law Offices Today!
In your time of financial distress, Wright Law Offices is your trusted partner for Chapter 13 bankruptcy in Phoenix. Our dedicated attorneys are committed to helping you regain control of your finances and work towards a debt-free future. Contact us today for a confidential consultation and take the first step towards your fresh financial start.
Remember, you don’t have to face your financial challenges alone. Let Wright Law Offices be your guide on the path to financial rejuvenation. Contact our chapter 13 bankruptcy lawyers now, and let’s start your journey towards a debt-free future together!
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