Question about the value of car and bike in a Chapter 13

[austinsmom]

Hello everyone,

Thanks everyone for all your help with my first question! I just wanted to ask...I am filling my chapter 13 tomorrow..and wanted to know...how if there is a way to do it...can I state I only wish to pay back the current fair market value of my car and motorcycle?

[justbroke]

If you are filing a pro se Chapter 13 in the Middle District of Florida, you have a lot of work to do. You really need to find a good book on Chapter 13 plans. You need to learn about valuation of property (under 11 USC 506). You then need to know the affects of 11 USC 1325 (plan confirmation), and the so-called "hanging paragraph". Specifically around what is known as "910-claims" or "910-vehicles".

Technically speaking, if the vehicle was purchased more than 910 days ago, or the loan is otherwise not "purchase" money, then you can strip down the claim to the value of the vehicle.

You should need to file a VERIFIED MOTION TO VALUE COLLATERAL 11 USC 506(a) and 11 USC 1325(A)(5). You will need to provide evidence of the value and attest that the claim is not for a vehicle purchased 910 days prior to the commencement of your case, or that the loan is not purchase money. (Or some other grounds to allow the court to bifurcate the secured claim.) In the Middle District you can use negative noticing. It is likely that the creditor will object.

If this is all sounding Greek to you, then you have more work to do.

What other assets do you have? A Chapter 13 is not something that I will just endorse. While there are several successful pro se filers (that have made it to confirmation) here on BKForum, it's a lot of work coming up with a confirm-able and feasible plan.

While I understand that you're filing tomorrow, I'm wondering what the State of your Chapter 13 Plan of Reorganization is at this point. Do you have one done? Are you filing just a skeleton? Do you know how to write the Motion to Value?

[austinsmom]

Hi...thank you for helping me. Yes I only have the bare bones ready to file...not the plan or anything yet. I do have pretty good income...enough to cover making the payments each month. I own my house but have no equity in it at all. The cars and bike were purchased 12 months ago. How can I find out if it was purcahse money? Also is there a way to lower the interest rate? Thanks so much!

[austinsmom]

Do you know a good way to value the autos?

[justbroke]

Hi...thank you for helping me. Yes I only have the bare bones ready to file...not the plan or anything yet. I do have pretty good income...enough to cover making the payments each month. I own my house but have no equity in it at all. The cars and bike were purchased 12 months ago. How can I find out if it was purcahse money? Also is there a way to lower the interest rate? Thanks so much!

The fact that you said that they were purchased 12 months ago, tells me that it's purchase money. (Purchase money means that the loan was used, in fact, to purchase the vehicle.) You can lower the interest rate using the Till Rate. You should look up Till and find out what Till is. (It's usually about 3-4% and can include a "risk" factor of 1-3%.) Regardless of whether you specify the Till rate in your Plan, you will likely receive objection from the creditors. You can use KBB or Edmunds or Black Book to value and would use Clean Retail. However, your vehicle(s) appear to be 910-vehicles so you can't cram them down to value. You could only offer to pay them at the current balance in the Plan.

Additionally, if this is a motorcycle, it will probably be deemed "not necessary for an effective reorganization" and considered a luxury. It's usually one vehicle per debtor, unless married.

I would never ever recommend filing if you don't already have the plan completed! The plan must be filed and served upon the creditor within 15 days after filing a skeleton case. All other schedules must also be submitted within the 15 days.

Are you sure that you're ready to do this emergency (skeleton) filing?

[austinsmom]

I dont think I have a choice...the cars are late and they are telling me and my husband that they are going to come get them. I dont have the money to catch the payments up on everything. I can however over time pay the past due amounts and also the past due amounts on the credit cards. The creditors are starting to call my mom and dad because I had to change my cell number because of the amount of calls. They are also calling where I work..and I look stupid because me and my hubby own the company.


Also...I looked up the till rate...thank you!...do I have to file a motion for that? or just state it in the plan?

[newbie2]

Austinsmom, filing a Chapter 13 pro-se is not for the faint of heart, or for those who don't know how to fill out the schedules properly. You're asking so many basic questions that it worries me for you. Take your time, download the NOLO book, or get an attorney.

[justbroke]

For Till, you need no motion. You just adjust the interest rate in the plan. I hope that you have the Model Plan for your District and that you have already been working on the Plan. Additionally, you really need to at least have the NoLo Chapter 13 guidebook.