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

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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