Cars and Bad Faith in Chapter 13

BAPCPA changed the law and restricted cramming down car values unless the car was financed more than 910 days prior to filing. But a debtor can still extend the term and payoff the note during the chapter 13 plan. Additionally, the debtor can reduce the contractual rate to the so-called Till rate, which has been 5.25% for some time in the Southern District of Florida.

But in a recent case, Judge Olson held that the good faith requirements of chapter 13 to confirm a plan are relevant as to recently financed vehicles. In the case In re Blackmon, , 2011 Bankr Lexis 3619, 2011 WL 4543923(Case NO 10-41452)(September 29, 2011), the debtors had already met with bankruptcy counsel, financed 2 vehicles at high interest, and filed bankruptcy within less than 80 days after obtaining the vehicle. Judge Olson denied confirmation of the plan which reduced the interest rate.

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