Robert Manchel

In general, when a person satisfies the total amount that must be paid on auto financing, the finance company must transfer the title to the borrower. The same general law applies to auto financing, in connection with a bankruptcy debtor.
A chapter 13 debtor has different options in making auto finance payments.
A  debtor may make monthly finance payments directly to the finance company.  At the time the auto finance company has received full payment, satisfying the debt, the finance company must transfer title to the debtor, even though the bankruptcy case is not completed.
The debtor may pay the prefiling arrears through the chapter 13 bankruptcy plan, while paying the future regular monthly payments directly to the finance company.  The finance company must deliver the title, after the trustee has paid the total arrears, and the debtor has satisfied the balance that is due on the financing.
The debtor may pay the auto company, by way of a cram down. This means that the finance company is paid only the value of the auto, plus a fair rate of interest, through the bankruptcy plan. The difference that is owed, between the value of the auto and the total balance due, is discharged. Under this scenario, the entire amount is not paid to the finance company. Therefore, the finance company need not transfer title until the chapter 13 case is completed and discharged.
If the total balance due to the finance company is paid through the chapter 13 bankruptcy case, the finance company must transfer title, after the trustee has paid the total amount that is due to the finance company, even though the plan has not yet been completed.
New Jersey Bankruptcy Lawyer, Robert Manchel, can be contacted  at 1 (866) 503-5655, to discuss your bankruptcy questions.

We are often asked by our clients how many vehicles they are allowed to own in bankruptcy.
The bankruptcy code does not specify the number of autos that a debtor may own. Therefore, theoretically, the debtor may own as many as they wish.
In a chapter 7, although unusual, the trustee is permitted to sell the debtor’s property that has a substantial value in excess of exemptions. The debtor is permitted to keep all the autos that can be exempted. Each debtor may apply his federal auto exemption of $3,450.00, in addition to any of his excess wildcard exemptions, which may be as much as $11,975.00. If a debtor owns autos that have a value in excess of the total exemptions applied to the vehicle values, the trustee may sell all vehicles that cannot be fully exempt.
In a chapter 7, the debtor cannot have disposable income after payment of his necessary and reasonable expenses. A chapter 7 trustee will not allow a debtor to use two auto payments for one person, as the second payment is not a necessary and reasonable expense.
The same issues relate to a chapter 13 case. The debtor must pay towards the unsecured debt, at least the amount of unexempt value in all vehicles.  Therefore, any portion of an auto that cannot be fully exempted, must be paid to the unsecured debt through the bankruptcy plan. Also, in a chapter 13, the debtor must pay no less than all of his monthly disposable income to the trustee. In general, the trustee will not permit a  person to apply  two auto payments as expenses for one person, as the second auto payment is not necessary and reasonable. In other words the second auto payment is a luxury item and not a necessity. However, it is possible to settle this matter with the trustee and continue paying for the second auto, if the debtor consents to making a higher monthly trustee payment.
Robert Manchel, a New Jersey bankruptcy lawyer will discuss your bankruptcy questions at 1 (866) 503-5655.