We’ve seen a few posts lately on this Forum dedicated to trouble with car payments. What to do if you can’t afford your car and how a lender may go about trying to enforce a deficiency judgment after a repossession have been two topics our readers have been interested in. This post will focus on how chapter 13 bankruptcy may be able to help you keep a car and force your lender to accept a lower monthly payment. Bankruptcy is a powerful consumer protection tool that when used correctly, can offer significant relief to those facing financial distress.

Chapter 13 bankruptcy allows for the “cram down” of auto loans and other secured debts. This means that if you owe more than your car is worth, the amount of your loan that exceeds the car’s value can be stripped or crammed down leaving you with a car payment that reflects your car’s true value. Bankruptcy reforms enacted in 2005 did provide a catch: loans made within 910 days of filing the case cannot be crammed down. The underscured amount of the loan will be paid out (often at pennies on the dollar) through the life of the payment plan you create with your attorney. Cram down of an auto loan is a possibility even if you are late on car payments. Assuming you can afford to make the payments once they have been modified, chapter 13 also affords the opportunity to pay pack past due amounts owed on a car over the life of a repayment plan. Paying back arrearages in this way will stop your lender from being able to repossess while giving you time to get current with reasonable installment payments. If you are having trouble making car payments and would like to explore your options, contact a bankruptcy attorney.