Paying Value of a Car in Bankruptcy
I have a client who is paying for a car in her bankruptcy. When she filed she had the car for about two years, so she had to pay the full amount owed on the car instead of the value. When going over the difference of why she would have to pay the full claim amount instead of the value she understood that she owned the car for less than 910 days, therefore, was not eligible to pay the value.
She has now been in her bankruptcy for almost six months, and the 910 is close. She thought she could not just pay the value of the car since she has now owned it for 910 days. I had to explain that there are two different dates that are looked at when determining if she would be paying the value of the car or the full claim amount in her Chapter 13 bankruptcy. The two dates to compare are the date of filing and the date the loan was acquired. The loan must have been received over 910 days from the date of filing. The chance to pay the value instead of the full claim does not resurface once the 901 days have passed if the Debtor is in a bankruptcy.
Her other misconception is that she wants to convert her case to a Chapter 7. She thinks she can just pay the value of the car if she converts to a Chapter 7 since it will be over 910 days since the date she acquired the loan and the date she converted her case. The only problem with that theory is that a Debtor cannot just pay the value of the car in a Chapter 7, but usually must pay the full claim amount that is owed.
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