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Upside down on car loan and engine just went out. Plan on filing ch 13 maybe should I fix car beforehand?

Lincoln, CA |

Car valued at $6000. Before engine went. Owe $10,000 on loan having trouble making payments.
then to fix engine $3500. Car is 2005 Mazda 3 w 90,000 miles on it.
On ch 13 I read only what auto is worth, so if I fix after will value increase.

I do need car to drive. But need to know if it would help filing ch 13 if not running. We have bad credit can't refi or purchase another vehicle. Husband was 1999 truck paid off no other assets.

Attorney Answers 4


  1. You can file Chapter 13 and present a Chapter 13 Plan based on what you believe the fair market value of the vehicle is. If the creditor believes the vehicle is worth more they may object to your plan or they may just accept what you are offering to pay them over the life of the plan but that is negotiations that are entered into after your case is filed. For the vehicle cramdown to be valid:
    •The vehicle must be for your own personal use
    •The balance due on the loan must be greater than the fair market value of the vehicle
    •You must have incurred the vehicle loan debt at least 910 days (roughly two and one-half years) before filing the bankruptcy petition with the court
    Hope this helps!


  2. Consult with a BK lawyer to see if a Chapter 7 works better for you before you file 13. Chapter 13's filed in pro se are rarely completed without the assistance of a lawyer. You can consult with me or any other AVVO lawyer offering a free consultation if you don't already have a lawyer.

    You are not my client and I am not your attorney. This advice is given in the spirit of the AVVO platform and is based on general legal principles. You become a client when you enter into a formal retainer agreement with me.


  3. Whether or not you have a car loan can significantly affect both Chapter 7 and Chapter 13. I strongly recommend speaking with an experienced bankruptcy attorney *before* you do anything with the car.

    The legal analysis of any situation depends on a variety of factors which cannot be properly represented or accounted for in a response to an on-line question. Any answer, discussion or information is intended as general information only, is not intended to serve as legal advice or as a substitute for legal counsel, and should not be relied upon in making any decision. If you have a question about a specific factual situation, you should contact an attorney directly.


  4. You need to immediately talk with a skilled bankruptcy attorney as the answer will depend on information you have not provided. It is kind of like going to a car dealer and asking how much a car costs.

    Do not try a Chapter 13 on your own. The Chapter 13 failure rate for people filing without an attorney is 99.999%.

    If you doubt me, check out what Chapter 13 Trustees have to say. They have their own website "Consider13.org." This is what they have to say as a caption to their article on the subject:

    THE NEW BANKRUPTCY MATH: [Your Chapter 13 Case] + [No Lawyer] = [Zero Success Rate]

    You need to also look at other options such as Chapter 7 if that is needed.

    FIND A SKILLED CHAPTER 13 BANKRUPTCY ATTORNEY

    In California, you can go to the California State Bar website to search for a Certified Bankruptcy Law Specialist.

    I would also recommend you find a quality bankruptcy attorney by looking at the Avvo.com ratings for Bankruptcy attorneys in the area.

    A third source would be to look for an attorney that is a member of the National Association of Consumer Bankruptcy Attorneys.

    Most bankruptcy attorneys will give you a free initial consultation.

    This response does not constitute legal advice nor is the attorney providing this advice in any way liable for the providing of this information. It is provided for general information only. No attorney client relationship in made by the answering of this question. Any reader of this response is recommended to seek the advice of a competent attorney in your area.