A press release on June 2, 2014 by Experian shows that long term loans for vehicles averaged 66 months for the first time. The trend appears to be for vehicle loans to lengthen with analysis showing almost 25% of all new vehicle loans in the first quarter of 2013 are 73-84 months. The Experian article indicates the reason for the extension of the vehicle loans is so consumers can afford the monthly payment on vehicles that are increasing in price.
This trend for vehicle loans to be extended more than 5 years could impact how plans are drafted in a chapter 13 and may make cramdowns of vehicle loans more attractive in a chapter 13 plan. When a vehicle was purchased greater than 910 days (2.5 years) before a chapter 13 bankruptcy is filed, the debtor can pay the value of the vehicle, not what is owed on the vehicle. Further, interest rates can sometimes be lowered in a chapter 13 plan.
The attorneys at Bond & Botes, PC will review your financial situation and when a vehicle was financed to determine if your vehicle payment can be lowered through a chapter 13 plan. Please make an appointment to contact an attorney at Bond & Botes PC to discuss keeping your vehicle and reorganizing the vehicle loan through a chapter 13 plan.