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“Cram Down” of Auto Loans

The “Cram Down” of Auto loans explained by an Indianapolis Chapter 13 Attorney

"Cram Down"

“Cram Down” of Auto Loans -Being an Indianapolis Chapter 13 Bankruptcy Attorney, I have gone through the “cram down” process for auto loans in Chapter 13 bankruptcy very frequently.   This “cram down” provision allows for a debtor to reduce the secured amount that must be repaid for their car or truck down to the current market value of the vehicle.   Let me explain how “cram down” works.

Give Me An Example of a Car Cram Down

If a car is eligible for a cram down, then you will only be required to pay the current market value of the car back to the creditor.   As an example, if your loan for the automobile was for $12,000 but the current market value was for $8,000, you would only have to pay back $8,000 as your secured debt amount.  You could save considerably because you would not have to pay back (at least 100%) almost $4000 (plus whatever interest).   In addition, you will likely only have to repay at an interest rate at about 4.5-5%.

Why and When am I Able to Cram Down an Automobile Loan?

When Congress wrote the Bankruptcy Code, they wanted to treat different “classes” of creditors as fairly and evenly as possible.   Therefore, to address part of this concern, Congress added Section 506 of the Bankruptcy Code.  For automobiles, Section 506 of the bankruptcy allows auto loans that are more than 910 days old (or approximately 2.5 years old) to be “crammed” down to market value.    Because these “older” auto loans can be (in reality) greatly unsecured after 2.5 years, Congress decided that it was fair both to the debtor and other creditors to only pay the secured portion back to the creditor with interest.   The rest of the auto creditor’s claim is then treated the same as all other unsecured creditors are treated within the Chapter 13 plan.

Are There Any Exceptions that MAY Allow a Cram Down Before 910 Have Past?

The “910” rule generally applies to a “purchase money” creditor only who lends to the debtor for a personal use vehicle.  It may be possible in some situations to cram an automobile beforehand if a vehicle has been refinanced by a new lender (or possibly the same lender), the automobile is used for business use, or possibly if the vehicle was purchased for someone else instead of the debtor.   Such situations could be sufficient to surpass the requirements of “purchase money” and “personal use.”  However, it is very likely that your creditor could object in your Chapter 13 case.  If that is the case, you will need to either settle with the creditor or let the judge decide if you can cram your automobile in such a situation.

A Unique Opportunity: Cramming Down Automobiles in Chapter 13

As an Indianapolis Chapter 13 Bankruptcy Attorney, I have seen many success stories play out over the years when our clients have crammed down their automobile loans in a Chapter 13 case.    We have seen budgets that simply do not work.   We have also seen massive balances that will never allow our client to pay off the vehicle before it breaks down.   Situations like this are perfect for the Indiana residents to take advantage of Chapter 13’s cramming provisions.

~Indianapolis Chapter 13 Bankruptcy Attorney John Bymaster

 

 

 

 

 

 

Bankruptcy Meeting of Creditors: You Have No Reason For Anxiety

Indianapolis Chapter 7 Bankruptcy Lawyer Describes the Bankruptcy Meeting of Creditors: You Have No Reason For Anxiety

Indianapolis bankruptcy definition in dictionary

Being a Chapter 7 Bankruptcy Lawyer in Indianapolis, I have experienced the bankruptcy meeting of creditors possibly thousands of times. The Bankruptcy Meeting of Creditors can cause anxiety for many people who have never experienced it before. This article will describe the Chapter 7 Bankruptcy Meeting to show you that there’s no cause for anxiety.

The Bankruptcy is Only a Procedural Requirement Under Section 341 of the Bankruptcy Code

Although you may have some anxiety about the Bankruptcy Meeting of Creditors, keep in mind that it is only a very routine procedural requirement of the Bankruptcy Code. Section 341 of the Bankruptcy Code requires the debtors in bankruptcy to be personally examined by the Bankruptcy Trustee through a series of simple questions. These questions are usually very routine and usually the Trustee does not anticipate for there to be any problems or assets in your case.

Your Creditors Will Most Likely Not Attend Your Bankruptcy Meeting

Although the Bankruptcy Meeting is many times referred to as the Meeting of Creditors, creditors very rarely attend these bankruptcy meetings. It is very unlikely that you will be examined by creditors in any way.

Keep in mind that the Bankruptcy Meeting is not a place for your creditors to object to the bankruptcy: it is only a place for your creditors to ask questions. Because there is usually no objection that creditors can bring to stop the discharge of their debt, creditors rarely find it necessary to attend the Bankruptcy Meeting.

Your Bankruptcy Meeting Will Go Smoothly Most Likely Because Your Attorney is Required to Present Documents to the Trustee Before the Meeting

When a Chapter 7 case goes as planned, documents will be sent to the Trustee ahead of time in order for review before the Trustee asks you any questions. Therefore, it is not very likely for there to be any surprises at the Bankruptcy Meeting. On occasion, additional documents or asset information may be needed after the Bankruptcy Meeting. However, such a request for additional documents is somewhat common and is no cause for alarm.

The Bankruptcy Meeting is Simple: You Sit Down and Answer Some Questions

Although it can be intimidating to come before a Bankruptcy Trustee, the reality is simply that you must sit down and answer some questions. Make sure to bring your driver’s license and Social Security card to the meeting and any other documents your attorney has requested. Also, be on time. After that, there is no reason for anxiety: just go to the Bankruptcy Meeting and answer the simple questions.

~Indianapolis Bankruptcy Attorney John F. Bymaster

Bymaster Bankruptcy Logo

 

Who is This Bankruptcy Trustee?

Indianapolis Chapter 7 Bankruptcy Attorney Explains the Role of a Bankruptcy Trustee

Bankruptcy Trustee Gavel

Who is This Bankruptcy Trustee?

Many times I am asked, “Will I have to come up before a judge for my bankruptcy?” In response, I answer, “No, you will be required to be examined by the bankruptcy trustee assigned to your case.” The next question follows, “What is a bankruptcy trustee?” Being a bankruptcy attorney in Indianapolis, I can explain very clearly the role of a bankruptcy trustee.

A Bankruptcy Trustee is Assigned Automatically in Chapter 7 or Chapter 13

When you file your bankruptcy case, a bankruptcy trustee will be automatically assigned to administer your bankruptcy. These trustees are pre-selected groups of attorneys and accountants who are familiar with creditor and bankruptcy law. You will meet with this trustee to answer some questions during your bankruptcy meeting of creditors.

The Role of a Chapter 7 Trustee

To put it simply, the role of a Chapter 7 bankruptcy trustee is to examine the value of your property to see if there are any nonexempt assets that should be sold to repay a portion of your debts. If no such assets exist, the trustee will file a report to the court stating that no money will be available for your creditors. However, if the Chapter 7 Trustee determines that assets do exist that can be properly sold to pay back some of your creditors, the trustee will follow through to ensure that such proper repayments will be eventually made.

The Role of a Chapter 13 Trustee

The role of the Chapter 13 trustee is to review your petition and repayment plan to make sure that your Chapter 13 case will be successful. The Chapter 13 Trustee will also conduct a meeting of creditors, but this meeting is more geared towards working out the details of your repayment plan instead of looking for assets. After your Chapter 13 bankruptcy plan is confirmed, the Chapter 13 Trustee will administer your plan and monitor it until completion.

Is the Bankruptcy Trustee on My Side or the Creditor’s Side?

Although arguably it can be asserted that the bankruptcy trustee represents the creditors, in reality the bankruptcy trustee is more of a facilitator of the bankruptcy system. The real goal of a bankruptcy trustee is to ensure that the requirements for the proper administration of all their bankruptcy case are met. Although Chapter 7 Trustees are motivated to find assets in their cases, proper administration of their cases under the bankruptcy code is the predominant agenda and duty of the bankruptcy trustee.

How to Address the Bankruptcy Trustee

The Bankruptcy Trustee assigned to your case should be addressed with respect in a way similar to how you would address a judge. The proper title in which you should address the trustee is either as “Mister Trustee” or “Madame Trustee.” When you answer your questions during the bankruptcy meeting, show similar dignity and respect to how you would address a judge.

Conclusion: The Role of the Bankruptcy Trustee is of the Highest Importance to the Bankruptcy System

Without a bankruptcy trustee being assigned to your case, our system of bankruptcy would have no examiner or facilitator in order to meet the requirements of the bankruptcy code. The bankruptcy trustee plays the most critical role in the bankruptcy system: the individual review and approval of each bankruptcy case. If you file bankruptcy, be sure to respect and cooperate with the bankruptcy trustee assigned to your case: his or her role is absolutely vital for your successful completion of your bankruptcy.

~Indianapolis Bankruptcy Attorney John F. Bymaster

How To Stop Creditors Who Just Don’t Get It

Indianapolis Chapter 7 Attorney Discusses Post Bankruptcy Harassment: How To Stop Creditors Who Just Don’t Get It

Image of woman on phone with a creditor

Have you experienced creditor harassment after your bankruptcy case was filed? Such creditor harassment is clearly illegal and improper under the bankruptcy code. In this article, Indianapolis Chapter 7 Attorney John Bymaster discusses what you need to understand about stopping post-bankruptcy harassment.

Creditor Harassment Should Be Permanently Stopped By Your Bankruptcy’s Automatic Stay and Discharge

When a bankruptcy case is filed, and invisible protective force called the automatic stay stops all future creditor collection and communication. This “invisible shield” called the automatic stay protects you during the entire bankruptcy process.

Near the end of the bankruptcy process, the debtor receives the discharge of their debts. This discharge permanently eliminates the debts that were listed on the bankruptcy petition and prohibits any future communication or collection attempts on those debts. Therefore, it is absolutely illegal for creditors to harass you after you file your bankruptcy.

Creditor Harassment After Bankruptcy

Creditors, either purposefully or by accident, sometimes contact or attempt to collect on debts after the Chapter 7 bankruptcy is filed. Every time a creditor contacts you or attempt any form of collection after your bankruptcy is filed, a sanction of $500 or more could be held against the creditor.

However, a common method for dealing with such creditors is to demand then to cease any form of collection and to reassert and redeliver the notice of bankruptcy. If the creditor only makes one or two attempts to collect and then ceases after the reassertion of the notice of bankruptcy, most debtors do not seek any form of damages against the creditor.

Adversary Suits: Seeking Damages against Especially vicious Post Bankruptcy Creditors

For especially vicious post-bankruptcy creditor harassment, and adversary suit demanding damages against the creditor can be filed within the original bankruptcy case. This adversary suit does not require a filing fee. The bankruptcy court is especially willing to protect debtors who are being improperly harassed by creditors after the bankruptcy cases file. Although bankruptcy courts do not want to see cases where the harassment was minor, the bankruptcy judges are especially interested in enforcing bankruptcy protection on vicious and clearly inappropriate collection situations in order to maintain the integrity of the bankruptcy system.

Post-Bankruptcy Creditor Harassment: You Don’t Have To Take It

If you are being harassed by credit or after you file bankruptcy, you don’t have to take it. Your bankruptcy attorney can assert your filing against the creditor to get them to stop. Even better (or worse), your attorney or their harassment co-counsel can easily bring an adversary suit against especially egregious post-bankruptcy creditor harassment. Don’t let creditors push you around after bankruptcy: assert your bankruptcy rights to be fully protected.