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Cars in Chapter 13 After the 2005 Amendments to the Bankruptcy Code


David Gray Carlson


Yeshiva University - Benjamin N. Cardozo School of Law

August 15, 2006

Cardozo Legal Studies Research Paper No. 161

Abstract:     
In 2005, Congress attempted to aid the plight of the secured creditor financing automobiles, especially with regard to chapter 13 cram down. The amendments it offered are peculiar and difficult. This article tries to reconcile all parts of the new amendments by distinguishing adequate protection payments from cram down payments, so that the new rules requiring equal cram down payments (which contain an interest component) and adequate protection paytments (which must not contain an interest component) can function in a non-contradictory way. The article also suggests that Congress inadvertently introduced an asset payment rule which permits debtors to put the car to the secured creditor in full payment of the car debt. Technically, this even allows the debtor to keep all insurance proceeds from a wreck while paying the secured creditor in full with the wreck itself - a shocking result not easily avoidable on the statutory language as written.

Number of Pages in PDF File: 57

Keywords: Bankruptcy, Consumers, Automobiles, Secured Credit, Chapter 13

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Date posted: August 21, 2006  

Suggested Citation

Carlson, David Gray, Cars in Chapter 13 After the 2005 Amendments to the Bankruptcy Code (August 15, 2006). Cardozo Legal Studies Research Paper No. 161. Available at SSRN: http://ssrn.com/abstract=925567 or http://dx.doi.org/10.2139/ssrn.925567

Contact Information

David Gray Carlson (Contact Author)
Yeshiva University - Benjamin N. Cardozo School of Law ( email )
55 Fifth Ave.
New York, NY 10003
United States
212-790-0210 (Phone)
212-790-0205 (Fax)

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