If you are considering Chapter 13 bankruptcy to strip down a vehicle loan, one issue that debtors have to consider is the value that the courts will allow. In Chapter 13 cases, the value of collateral is defined as “the replacement value of such property … without deduction for costs of sale or marketing." In the case of vehicles, this is the retail value of the vehicle. To determine this amount, debtors and their attorney can utilize a couple options, including Kelley Blue Book and the National Appraisal Guides.
The difference between values can be quite substantial. For example, the retail value of a 2005 Toyota Camry with 50,000 miles is approximately $14,500, while the same vehicle has a private party value of $12,600 (as of 6/2/2011). Over a course of a three (3) year plan, this amount is equal to approximately $60 a month. The price a person could really obtain for the vehicle may be significantly less. However, the Bankruptcy Code regulates that a debtor does not get to simply estimate the value. These values are regulated.
Should you have any questions on Chapter 13 vehicle values or other bankruptcy questions, contact the Henshaw Law Office today at (408) 533-1075.
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