Can I Keep My RV in Chapter 13 Bankruptcy? A Comprehensive Guide
If you’re considering filing for Chapter 13 bankruptcy and you own an RV, you may be wondering if you can keep it. The answer is, it depends on your specific circumstances and the terms of your bankruptcy plan.
Chapter 13 Bankruptcy and Assets:
Chapter 13 bankruptcy is a type of reorganization bankruptcy that allows you to repay your debts over a period of three to five years. In a Chapter 13 bankruptcy, you propose a repayment plan to the bankruptcy court that outlines how you will pay back your creditors. The plan must be approved by the court before it goes into effect.
Unlike a Chapter 7 bankruptcy, your Chapter 13 trustee can’t sell any of your assets assets, including your RV. Additionally, your RV lender will not want to repossess the RV as long as you stay current on the payments. Your RV will be considered an asset in your Chapter 13 and your bankruptcy plan terms will determine whether you will be able to keep your RV in your case.
The Trustee and Your RV: Necessity is Important
In a Chapter 13 bankruptcy, a trustee is appointed to oversee your case and ensure that your creditors are paid according to the terms of a bankruptcy code.
The most important issue will be whether the RV is necessary for reorganization. If the RV is merely a luxury item then the Trustee may object to you keeping the vehicle unless the plan proposes to pay the unsecured creditors in full.
Alternatively, if you live in the RV or are required to use the RV for work then it is far less likely that the Chapter 13 trustee will object because you will be able to show that the RV is necessary for you to reorganize your debts in your case.
The Creditor and Your RV: Lower Hight Interest Loans
The bankruptcy code also allows you to propose to lower your interest rate on your secured debts. As such, you might be able to lower your interest rate and pay off your RV through your chapter 13 plan if you are saddled with a high interest rates on your RV.
The lower interest rate in a bankruptcy is called the “Till Rate” and is derived from a U.S. Supreme Court case called Till vs. SCS Credit Corp. where the Supreme Court determined that a Chapter 13 bankruptcy can propose to pay interest that is calculated off of the prime rate rather than the contract interest rate.
In Florida, the Bankruptcy Courts typically approves interest that is a couple of percentage points higher than the prime rate – a rater that is usually much lower than the contract interest rate for a RV.
In conclusion, if you’re considering filing for Chapter 13 bankruptcy and you own an RV, you may be able to keep it as long as you can show that you need the RV and continue to make payments on it. However, the terms of your bankruptcy plan will determine the amount you will have to pay each month. It’s important to consult with an experienced bankruptcy attorney who can help you navigate the complexities of bankruptcy law and determine the best course of action based on your specific circumstances.