25 Jul What is a “910 Car Claim” and Should You Be Worried About It?
The Bankruptcy Code treats vehicle loan claims differently, depending on how long ago you purchased your vehicle. Specifically, if you purchased your vehicle less than 910 days ago, you will end up paying the full balance due, with interest, in your Chapter 13. If you purchased your vehicle more than 910 days from the date of filing, you may be able to “cram down” the claim to equal the fair market value of the vehicle and you may also be able to reduce the interest rate.
This 910 day rule also impacts how the bankruptcy court will treat the deficiency claim if you decide to surrender your vehicle as part of your Chapter 13 reorganization. However, bankruptcy judges in various States have not come to identical conclusions. In some jurisdictions, if you surrender a vehicle that was purchased less than 910 days ago, whatever deficiency balance arises will be deemed to be wiped out. In other jurisdictions, the vehicle lender is permitted to file an unsecured claim for the deficiency balance.
If you are proposing a plan that calls for a 75% dividend to unsecured creditors and your deficiency balance is $10,000, your Chapter 13 plan will become a lot more expensive.
The rules surrounding 910 day vehicles are new and the law in this area is still evolving. You can read several helpful posts about 910 day claims elsewhere on this blog.
Prior to the enactment of BAPCPA in October, 2005, there were no such rules. When you go to hire a lawyer, you need to make sure that he/she is up to date on issues that are new in the BAPCPA laws. If you speak to a lawyer and he has never heard of the 910 day rules, you might want to keep looking as that would suggest that the lawyer is not as up to date as he ought to be.
You should also be aware that the rules on 910 day claims vary from State to State. Because most Chapter 13 cases involve vehicles and because the repercussions can be so significant you need to discuss these issues with your lawyer in the district where you file so that you won’t have any nasty surprises.
Jonathan Ginsberg, Esq.
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