The Cramdown Battle Rages

Credit union collectors know the drill: the member buys a dream car, financing it at the credit union. Once driven off the lot, the car depreciates 15%-20% almost immediately, and the member files bankruptcy. Voila! Cramdown shifts the loss to the credit union. When Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, it aimed to remedy this type of Chapter 13 abuse. The new rule is somewhere between Sections 1325(a) and 1325(b) of the Bankruptcy Code. The 11th-hour vehicle purchase now does the debtor no good. The credit union's claim now will be paid in full. While debtors' attorneys still try to pull a fast one and cram down your claim at every turn, collections and bankruptcy personnel must recognize this critical new weapon.