If you bought your car more than 910 days (about two and a half years) before filing, Chapter 13 lets you pay the car's current value instead of the loan balance, at an interest rate the court sets rather than the one on the contract. The difference becomes unsecured debt and is mostly discharged. Buy the car more recently than that, and you pay the full balance, though the interest rate can still drop.
The 910-day line
Count backward from the day the petition is filed. If the purchase-money loan on your car was made more than 910 days earlier, the loan can be crammed down. If it was made inside that window, Congress said the lender gets the full balance, because too many people were buying a car and filing six months later.
Two wrinkles. The rule only protects purchase-money loans, meaning the loan that bought the car. A title loan or a refinance from a credit union that paid off the original lender is not purchase money and can be crammed down regardless of age. And the car has to have been bought for your personal use. A truck bought for a landscaping business falls outside the 910-day protection even if it's newer, though in practice lenders argue about that.
For personal property other than cars, the window is one year.
Before and after, with real numbers
A client bought a Nissan Rogue in early 2022 from a lot on Figueroa with the kind of financing those lots offer. Balance at filing: $19,500. Contract rate: 21%. Payment: $604 a month with 48 months left. The car is worth $11,000 today. The purchase is more than 910 days old.
| Before filing | In the plan | |
|---|---|---|
| Amount owed on the car | $19,500 | $11,000 (the value) |
| Interest rate | 21% | Roughly 9.5% (prime plus a risk margin) |
| Monthly payment | $604 for 48 months | About $231 for 60 months |
| Total paid on the car from here | About $29,000 | About $13,900 |
| The other $8,500 | Owed in full | Unsecured; paid at the plan percentage, rest discharged |
The $231 is paid inside the plan payment, through the trustee, not to the lender directly. At the end of the 60 months the lender releases the title. The lender gets the value of its collateral, which is the deal the Code offers it, and nothing more.
How value gets decided
The standard is replacement value: what you'd pay a dealer for a car of the same age, mileage and condition. In practice that's the private party or retail figure from a recognized guide, adjusted for what's wrong with the car. We photograph the dents, get an estimate for the transmission noise, and put it in the plan. Lenders sometimes object with a clean retail number, and we meet somewhere in between or, rarely, the judge decides.
The bigger the gap between balance and value, the harder the lender looks. A $2,000 difference draws no objection. An $8,500 one, like the example above, sometimes does. Auto finance companies that specialize in subprime loans have counsel in Los Angeles who watch these plans.
The interest rate the court sets
The contract rate goes away. The plan proposes a rate based on the national prime rate plus a risk adjustment, usually one to three points, under a Supreme Court case called Till. Where prime sits lately, that lands in the neighborhood of 9 to 11% for most consumer car loans in the Central District. Lenders can argue for the high end; the plan usually proposes the low end; confirmation lands somewhere in between.
This part works even for cars inside the 910 days. The balance can't be reduced, but the rate can, and on a 24% loan from a buy-here-pay-here lot the rate reduction alone can cut the payment by a third.
When cramdown is the wrong move
Sometimes the arithmetic favors handing the car back. If the loan is $19,500 on a car worth $6,000 with 130,000 miles and a check-engine light, paying $6,000 plus interest over five years for a vehicle that may not last five years is a bad trade. Surrender it in the plan, the deficiency becomes unsecured, and use the payment room for something reliable. The Chapter 13 overview covers surrender as an option.
There's also the plan-length issue. The crammed-down balance has to be paid within the plan, not beyond it. A $25,000 crammed-down balance on a 36-month plan is $700-plus a month on the car alone, which doesn't help anyone. Sometimes stretching to 60 months is the answer even for a below-median filer, which the Code permits for cause.
What to bring to the consultation
Three documents settle most cramdown questions in ten minutes:
- The retail installment contract, which shows the purchase date and whether the loan is purchase money
- The most recent statement showing balance, rate and payment
- The current mileage and a note of anything wrong with the car
With those, Naomi can tell you on a free video call whether the 910 days have run, roughly what the plan would pay, and whether the car is worth keeping at that number.
the date on the contract is what I check first, before the balance, before the value. People remember when they bought a car in seasons, not days, and 910 days is a specific number. If a client is at day 880, I'll tell them what a month of waiting is worth in dollars and let them decide, as long as nothing else in the case is on fire. If the repo truck is already circling, we file, and the rate reduction alone is still worth having. The calendar, not the car, decides which of those conversations we're having.
Questions people ask about this
Can I cram down a car loan in Chapter 7?
No. Chapter 7 offers redemption, which means paying the car's value in one lump sum, not over time. Cramdown over a plan is only in Chapter 13. For most people, coming up with $11,000 in cash isn't realistic, which is why the Chapter 13 version gets used more.
What if I refinanced the original car loan?
A refinance that paid off the original lender is generally not purchase money, so the 910-day rule doesn't protect it. That loan can be crammed down regardless of when you bought the car. Lenders sometimes argue otherwise, and the paperwork decides.
Do I still pay the lender directly during the plan?
No. A crammed-down car is paid through the trustee as part of the monthly plan payment. The lender gets its share from the trustee's disbursements. You do keep paying insurance, and the plan will require you to keep full coverage.
What happens to the title at the end?
Once the crammed-down amount and interest are paid and the discharge is entered, the lender releases its lien and the DMV issues a clean title. If the case is dismissed before that, the original loan terms come back.
Can I cram down a leased car?
No. A lease isn't a loan and there's no balance to cram down. In Chapter 13 you either assume the lease and keep paying it as written, or reject it and return the car.
Talk it through with the attorney
If you've had your car more than two and a half years and the loan is bigger than the car is worth, book a free video consultation. Naomi will run the before-and-after on your actual balance and value, and tell you whether it's worth keeping.