Lawyer In New Jersey Explains The Limitations Of Reducing Auto Finance Payments In New Jersey Bankruptcy Case.
A debtor is permitted to reduce the amount that is required to be paid on auto financing in New Jersey, under specific circumstances. The bankruptcy states that a person is permitted to “cramdown” the auto financing, if the vehicle was purchased, with the financing, more than 910 days prior to the bankruptcy filing, for personal use”. This is called a “cramdown” and is explained, in detail, in my other blogs.
If the auto was purchased, with the financing, for personal use, within 910 days prior to the filing, than a”cramdown” is not permitted. However, if the auto was purchased, with the financing, for personal use more than or later than 910 days prior to the filing, than a “cramdown” is permitted. For example, under this scenario, a “cramdown” is permitted if the vehicle was purchased, with the auto financing, 911 days prior to the filing. Therefore, if a debtor wishes to “cramdown” the auto financing, he must review the auto financing documents to confirm the date of the purchase.
If the vehicle was purchased for business use and not personal use, than the 910 day limitation and the requirement that the auto was purchased with the financing funds, does not apply. For example, if a person purchased a vehicle with the financing, thirteen months prior to the bankruptcy filing, the debtor is permitted to “cramdown” the financing. Of course, the debtor cannot purchase a vehicle with the intention of cramming down the debt in bankruptcy. Consequently, the debtor would not b permitted to “cramdown” the auto financing, if the purchase was made immediately prior to the bankruptcy filing, due to fraud.
A debtor is permitted to cramdown the auto financing if the financing was not used to purchase the vehicle. For example, a person owns a financed free vehicle that is used for collateral of a loan. Under this scenario, the auto financing may be “crammed down” if the auto was purchased prior to the 910 day limit for personal use.
The Law Offices of Robert Manchel, may be contacted at (866) 503-5655 to discuss your bankruptcy options.