We all know that the second we drive that new or used car off the lot, it just depreciated thousands of dollars from what we just paid. Years later, many find that they owe more on their car than what it’s worth and the payments are eating you alive. There’s a solution in a Sunrise Chapter 13 called the “car cram down.” If you bought your car over 910 days ago (two and a half years) and financed it, you can reduce the total balance of your auto loan and pay it off within your Chapter 13 payment plan at 5.25% interest. In most cases, this lowers the monthly payment significantly and you only pay what the car is valued at on the day that we filed the Davie Chapter 13 case.
As an example, let’s say that you paid $30,000 for your car three years ago. On the day we file your Pembroke Pines bankruptcy, the car is only worth $18,000 but you still owe $22,000 on the auto loan. Your car loan is no longer fully secured by the car. Only $18,000 of the loan is secured and $4,000 of the auto loan is unsecured. In your Pembroke Pines Chapter 13 bankruptcy, you will only pay $18,000 over the length of your plan (36 to 60 months) at an interest rate of 5.25%. The $4,000 that was unsecured by the car now becomes unsecured debt (like credit card debt) and gets wiped out with the end of your bankruptcy case.
The opportunity to cram down your car’s loan balance is a huge benefit in reorganizing your debt and getting a fresh start. Your upside down car is not right-side-up and you’ve probably reduced your monthly car payment by hundreds. That car that you might have surrendered in a Chapter 7 because it was unaffordable is now affordable and you are paying its current value on the day you filed.
Most of the time, auto lenders don’t like the cram down option and although we estimate what the car is worth on the day we file and propose a monthly payment, we can usually expect the auto lender’s attorney to contest our valuation and try to get more for their client. These matters always get resolved and regardless of the final valuation, the vast majority of people see a reduction in their car loan balance and interest rate.
In addition to getting out of debt, you can get a better car deal today than when you bought the car. Take advantage of our free bankruptcy consultation and ask us about our “No Money, No Problem” payment options! Our office is conveniently located in Cooper City and is only minutes away from Ft. Lauderdale, Hollywood, Pembroke Pines, Miramar and Davie. We are here to help you find solutions to the creditor harassment. Call today or book an online appointment with our Ft. Lauderdale bankruptcy lawyer. You will be glad you did.