J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

Most of the time, I enjoy my work and am happy to help people with their debt problems. Like this morning, when a Chapter 13 bankruptcy client left my bankruptcy law office in Houston after we had signed her Chapter 13 petition and plan. She said, "I can breathe again," and was very relieved that the case was being filed and that she would be protected from her creditors.

In her case, the Chapter 13 would stop a repossession, and allow her to pay for a vehicle through her plan. Not only that, it would allow her to pay only the value of the vehicle, as opposed to the full amount due, plus a lower interest rate than provided by the contract.

Then when the plan is completed, she gets the title to the vehicle, free and clear. So long as you purchased your vehicle more than 910 days (about 2.5 years) before filing the bankruptcy, this "cram down" of personal use vehicles is possible. Otherwise, you must pay the full amount due, but you can still lower the interest rate, and pay it out over 5 years, which still can greatly lower the payments.

In this client's case, we are also paying some I.R.S. Taxes through the bankruptcy, which will keep them from charging her any additional interest. Her other debts were mostly being discharged or cancelled. Her student loans can't be cancelled, but at least they are stayed (they can't try to collect from her during the Chapter 13 bankruptcy), and when the case is over, she can seek a payment plan with them.

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