Vehicle Cram Downs

[Sdreams]

(Only) I’m filing chapter 13. We have one car that we owe $45k on at 8% - my husband got a job 2 years ago that he drives about 50k miles a year so now the car is worth maybe 20k

The other car we owe 48k at 7%. We got it 1.5 years ago and it doesn’t have many miles but the vehicle is worth about $33k.

We want to keep both cars although I (2nd car) don’t mind if I have to get rid of it.
Why?

Car #1 has an unlimited mileage warranty through 2026 and all maintenance including brakes through 2027. With how much my husband drives, it comes in handy

Car #2 has a warranty through 2032 or 150k miles. That will come in handy through the years.

Car number 1 is financed by both myself and my husband but only have my husband on title and registration. (Husband not filing)

Car 2 is financed only in my name.

How does one NOT qualify for a cram down on vehicles? What are the downsides? Is it not a good idea to?

Also to note: car number one is financed with navy fed that also has 3 cards and a personal loan.

Car 2 is financed with a small credit union that I have one card with and one personal loan. We don’t care if we get the titles. Don’t care. When we are done with car 1 in 2027 when all warranties run out, it will have 300k + miles and be 8 years old. Worthless. When we are done with car 2 it will be 10 years old with 150k miles when all warranties run out. Pretty worthless although not as much as the first.

[justbroke]

You need to have purchased the vehicle from the initial creditor at least 910 days in order to cram down the value. This so-called "cram down" paragraph is in 11 USC 1325; it is also known as the hanging paragraph. It is an anti-modification paragraph so that debtors can't just cram down a "newly" purchased vehicle.

I don't know if you spoke to any attorneys but only one of your vehicles is close to the 910-days.

You may want to consider surrendering one of the cars and getting a newer/ish vehicle to survive a 5 year Chapter 13 plan.

[Sdreams]

Car #1 will be 910 days on 10/31. We do have an attorney and have petition scheduled Monday. Although I must admit with everything I forgot to ask what a petition is.

Since car #1 is 910 days on 10/31, should we wait until 11/1 to file?

[justbroke]

The petition is your Bankruptcy Petition (Form 101) and all the completed schedules and required local forms.

Please discuss whether you should wait to delay your filing with your attorney. It may be more strategic but you may need to make other decisions requiring running some numbers. If you are going to be in a 100% plan, this may be moot since you'd have to pay it all anyhow.