Am I required to cram down an auto loan?

[Slingerland]

I bet people's eyes are rolling already...

I am filing a C-13 by myself, wife not included. We have three cars financed jointly (hers, mine, son's), the local trustee is requiring all three cars be paid through the plan. Son's car is almost at the 2 1/2 year point where it could be crammed down, the other two cars are too new. All three are upside down.

Here's the issue: my wife is not filing. She has an attitude about it. So to stay married, my plans are geared to keep her out of the bankruptcy.

I am waiting until the November-December timeframe to file, but that points me at the timeframe where a cramdown is allowed under law. My plan is not a 100% payment to unsecured. My concern is that if the trustee wants to cram down the auto loan (to increase the % to unsecured), the auto company will sue my wife for the difference.

Am I correct in my concern? Or am I worrying about nothing?

Thanks!

[kornellred]

First of all - being able to cram down an auto loan in Chapter 13 is pretty much a "gift". I cannot think of a situation where it would not be to a debtor's advantage, especially if the vehicle is very expensive. You cannot be sued for the difference in a cram down - the excess is unsecured debt and is discharged upon completion of the Chapter 13 plan.

[Slingerland]

KR, what I'm afraid of is that my wife would be sued for the difference, not me. The car is in both names, but I am the only person filing bankruptcy. When crammed down, the unsecured part is still under both names, and my wife will not be under bankruptcy protection.

I wonder if this would be a case where a special class of 100% payback to unsecured would be justified?

[newbie2]

This is interesting because of the co-debtor not filing. My understanding is this: While you are in your plan your co-debtor is protected by the automatic stay. Can the lender come after your wife after your discharge? I believe so. It's one of the risks that one takes when filing separately (or having a co-signer on a loan).

[despritfreya]

Your Trustee is not going to force you to bifurcate the claim into secured and unsecured.

1. Such is not his job as doing so would be giving legal advice on how to properly treat a creditor at your option.
2. Under 11 USC 1301 you can elect to pay any creditor in full to protect a co debtor so long as the debt itself is a consumer debt. I would imagine that a family vehicle falls into the consumer debt category.

Des.

[Slingerland]

Freya, thank you VERY much!