Converting to non-consumer Ch7 today

[AZNoName]

I'm hoping to have filed a conversion from Ch13 to non-consumer Ch7 by the end of the day... once I get some final questions answered.

I've made 3 Ch13 plan payments which are still held by the trustee and have not been disbursed to any creditors. I am also making my car payments through the Ch13 payment plan.

Once I convert to Ch7, when do I start paying on my car again? Do I have a window of time to send the back car loan payments in? How does this work??

Thank you!

[justbroke]

Once I convert to Ch7, when do I start paying on my car again?

You make them when they become due. So if you file today and the payment is due 2/29, then you pay on 2/29.

Do I have a window of time to send the back car loan payments in? How does this work??

This is the problem with a Chapter 13 being converted to Chapter 7. While in the Chapter 13, you actually re-amortized your car loan and paid a different value. However, you are technically behind in payments. As soon as you convert to Chapter 7, the back payments become due! I actually reaffirmed one of my cars (and later refinanced it) and the bank was nice enough to just re-amortize the payments over the same number of months. This may not happen for you.

You will need a strategy. This may be to actually REDEEM your car! That's right, i said redeem. Redemption is an option in Chapter 7. I actually did this for one of my vehicles because I owed at least $9-11K more than it was worth at the time of conversion. The lender first balked at it, objecting to my redemption, but my prompt letter to their attorney made them change their mind. In fact, they offered a lower redemption amount than I had asked for!

Redemption value is determined as of the date of the redemption hearing... not when you filed. (At least that's the caselaw and precedence in the 11th Circuit.)

[OhioFiler]

You make them when they become due. So if you file today and the payment is due 2/29, then you pay on 2/29.

This is the problem with a Chapter 13 being converted to Chapter 7. While in the Chapter 13, you actually re-amortized your car loan and paid a different value. However, you are technically behind in payments. As soon as you convert to Chapter 7, the back payments become due! I actually reaffirmed one of my cars (and later refinanced it) and the bank was nice enough to just re-amortize the payments over the same number of months. This may not happen for you.

You will need a strategy. This may be to actually REDEEM your car! That's right, i said redeem. Redemption is an option in Chapter 7. I actually did this for one of my vehicles because I owed at least $9-11K more than it was worth at the time of conversion. The lender first balked at it, objecting to my redemption, but my prompt letter to their attorney made them change their mind. In fact, they offered a lower redemption amount than I had asked for!

Redemption value is determined as of the date of the redemption hearing... not when you filed. (At least that's the caselaw and precedence in the 11th Circuit.)

I would think the smartest move for the petitioner is to contact US Bank's 722redemption arm and see if they will negotiate the redemption for him.

[justbroke]

I would think the smartest move for the petitioner is to contact US Bank's 722redemption arm and see if they will negotiate the redemption for him.

That's exactly what I did. Of course, the strategy requires a strategy. After I redeemed the vehicle, I refinanced it in 6 months for a rate that was 10% less than the 722 Redemption loan.

If you do this, you need to start the Redemption Motion now.

[AZNoName]

JB, how long have you owned the car? I purchased mine 9 months ago. I read somewhere you need to have owned the vehicle 900+ days to redeem it?

[SMinGA2]

The 910 day rule is about cramming down the value of a car in a ch. 13. I don't believe there is such a requirement in a ch. 7 for redemption.

One snag - 722 Redemption probably can only begin to work with you once you're a ch. 7 case. Something you need to find out: for how long after converting will you have the benefit of the automatic stay?

JB, how long have you owned the car? I purchased mine 9 months ago. I read somewhere you need to have owned the vehicle 900+ days to redeem it?

[justbroke]

JB, how long have you owned the car? I purchased mine 9 months ago. I read somewhere you need to have owned the vehicle 900+ days to redeem it?

As already stated, the 910 day rule is for a Chapter 13. it does not apply in a Chapter 7.

To clarify another point, Redemption is not an option in Chapter 13. You would need to be in a Chapter 7 (Already filed Notice of Conversion), in order to file a Motion to Redeem. However, it can be done as a so-called "first day" motion.