25 May Satisfy a Car Loan by Surrender in Connecticut
On February 24, 2009, Judge Dabrowski of the U.S. Bankrupcy Court in Connecticut ruled that a car may be surrendered to a creditor in a bankruptcy case to satisfy a car loan that is less than 910 days old. Well, there’s a mouthful. In short, 910 car claims are given special treatment in bankruptcy. In a well-reasoned 45 page decision, the judge found that the car could be surrendered to the creditor and no further money needed to paid on the difference between the value fo the vehicle and loan balance.
In the case of In Re Pruitt, the judge decided the question of whether a Chapter 13 debtor may confirm a bankruptcy plan that proposes to surrender a motor vehicle that collateralizes a ‘purchase money’ debt that arose within the 910 days preceding the filing of the debtor’s bankruptcy petition (a 910-Vehicle Claim) in full satisfaction of the entire 910-Vehicle Claim, despite the fact that the amount of the 910-Vehicle Claim exceeds the value of the subject vehicle.