The Day Rule Qualification One limitation to cramming down your car loan is that you must acquire the car loan more than days before you filed for bankruptcy. The law intends to prohibit cramdowns on newly purchased cars. If days haven’t passed, you Author: Cara O'neill, Attorney. Proof Of Claim. This is an Official Bankruptcy Form. Official Bankruptcy Forms are approved by the Judicial Conference and must be used under Bankruptcy Rule L. –8, § (b), inserted concluding provisions at end “For purposes of paragraph (5), section shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the day preceding the date of the filing of the petition, and the collateral for that debt consists of a motor .
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The court found that since the debtor did not propose to pay that claim value even without interest , the objection to confirmation was sustained. Lawyers and creditors on the front lines of consumer bankruptcy law may wish to apply the practical approach in In re Johnson 14 and, if the value is determined, fashion an agreement to the loan term and the interest rate. William Houston and Ahern Lawrence R. Skip to main content. Home Timothy D. The Hanging Paragraph and Cramdown 11 U.
May Column Name:. Consumer Corner. Bankruptcy Code:. Topic Tags:. Plan Confirmation. Journal Date:. There are three labeled exits from the freeway. Find one and you save your client thousands of dollars. Miss them all and you do your client a disservice. Unless you can find an off-ramp, the debtor is stuck paying the contract balance on the loan. Remember, however, that even a car loan is subject to a Till interest adjustment. Image courtesy of Striking Images by Bo.
And sometimes you can get past the day problem by just waiting a short period to file the case. Why, I asked? II if the case under this chapter is dismissed or converted without completion of the plan, such lien shall also be retained by such holder to the extent recognized by applicable nonbankruptcy law;. II the holder of the claim is secured by personal property, the amount of such payments shall not be less than an amount sufficient to provide to the holder of such claim adequate protection during the period of the plan; or.
C the debtor surrenders the property securing such claim to such holder;. For purposes of paragraph 5 , section shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the day period preceding the date of the filing of the petition, and the collateral for that debt consists of a motor vehicle as defined in section of title 49 acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing.
B if the debtor is engaged in business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business. B in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or.
II in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or. B may be less than 3 or 5 years, whichever is applicable under subparagraph A , but only if the plan provides for payment in full of all allowed unsecured claims over a shorter period. Amendment of Subsection b 2 Pub. Historical and Revision Notes. Amendments —Subsec.