A Handy Guide to Chapter 7 vs. 13 for Your Secured Debts
When is it better to reaffirm your secured debt--such as a vehicle loan--in a Chapter 7 case or instead cram it down under Chapter 13?
Chapter 7 vs. 13 When Your Vehicle is Worth Too Much
Usually your car or truck is protected in bankruptcy with a vehicle exemption. Or if the vehicle is worth too much Chapter 13 can protect it.
Cramdown on Vehicle Not Bought for Personal Use
The 910-day condition for doing a vehicle debt cramdown doesn't apply if the vehicle was not "acquired for the personal use of the debtor."
Cramdown on Collateral Not Purchased with the Debt
The 910-day & 1-year conditions for doing a Chapter 13 cramdown don't apply if the creditor doesn't have a purchase money security interest.
Verifying that a Creditor Has a Valid Security Interest
A creditor's rights over you in either Chapter 7 or 13 vastly increase if it has a security interest. Now's the time to find out for sure.
Example of Reaffirming vs. Cramming Down Furniture Loan
An example comparing the reaffirmation of a debt secured by furniture in a Chapter 7 case and cramming down that debt in a Chapter 13 case.
Example of Reaffirmation Agreement vs. Cramdown of Vehicle Loan
Here's an example of the reaffirmation of a vehicle loan in a Chapter 7 case vs. "cramdown" of the debt in a Chapter 13 case.
Examples of Reaffirmation Agreement vs. Chapter 13
Here are examples of the reaffirmation of a secured debt (like a vehicle loan) in a Chapter 7 case vs. addressing it in a Chapter 13 case.
Reaffirmation Agreement vs. Chapter 13
When is it better to reaffirm a secured debt (such as a vehicle loan) in a Chapter 7 case vs. handling it instead in a Chapter 13 case?
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Rescinding a Reaffirmation Agreement
Unlike most legal contracts, you can change your mind and undo a reaffirmation agreement during a short period of time after signing it.
The Reaffirmation Hearing
You don't need to go to a reaffirmation hearing, unless you don't have a lawyer, or he or she does not sign the reaffirmation agreement.
Reaffirming a Debt That’s Not Current
You usually have to get current on a secured debt before you can reaffirm it. But the terms of a reaffirmation agreement may be negotiable.
Be Cautious about Reaffirming a Debt
Reaffirming a debt, including a vehicle loan, can be a very sensible choice. But be fully aware of the risks and possible other options.
A Debt Reaffirmed under Chapter 7
You can usually keep collateral you need to keep by entering into a "reaffirmation agreement" with the creditor during your Chapter 7 case.