Chapter 13 and Your Car: Catching Up, Cramdown, 910 Days

Bankruptcy · 21 October 2026

If you are behind on a car loan and worried about repossession, most of what you read online is about Chapter 7: keeping the car by staying current, reaffirming, redeeming it or giving it back. We cover those choices in Can I Keep My Car in Chapter 7?. Chapter 13 works differently. It is a repayment plan, and it gives you tools Chapter 7 does not, especially if you have fallen behind. This guide explains them. It is current as of October 21, 2026.

How Chapter 13 stops a repossession

Filing a bankruptcy case puts the automatic stay in place, which stops most collection activity, including repossession efforts, while the case is pending. Chapter 13 adds something Chapter 7 does not have: a co-debtor stay. Under 11 U.S.C. 1301, once a Chapter 13 case is filed, a creditor generally cannot try to collect a consumer debt from someone who is liable on it with you, such as a co-signer on the car loan.

That protection has limits. It does not apply if the co-signer became liable in the ordinary course of their own business, and it ends if the case is closed, dismissed or converted to Chapter 7 or Chapter 11. A creditor can also ask the court to lift it, for example where the co-signer actually received the benefit of the loan or the plan proposes not to pay the claim.

Catching up missed payments through the plan

The plainest use of Chapter 13 for a car is catching up. The Bankruptcy Code lets a plan cure defaults (11 U.S.C. 1322(b)), which means missed payments can be spread over the life of the plan instead of being due all at once. The plan generally runs three years if your household income is below the Illinois median and can run up to five years if it is at or above it; it can never run longer than five years.

This is the key difference from Chapter 7, which usually has no built-in way to catch up arrears. If the car is worth keeping and you can afford the ongoing cost, a plan can turn a past-due balance into something manageable.

Cramdown: paying the car’s value instead of the balance

Chapter 13 can also change the loan itself. A plan may modify the rights of secured creditors, except for a claim secured only by your home (1322(b)(2)). For a car loan, that can mean a “cramdown”: when you owe more than the car is worth, the lender’s secured claim can be limited to the car’s value, and the rest of the balance is treated like your other unsecured debts in the plan.

The lender is protected in other ways. Under 11 U.S.C. 1325(a)(5), if you keep the car, the lender keeps its lien until the debt is paid or you receive your discharge, and the plan must pay the secured claim in full, measured as of the plan’s effective date. That includes interest, because a dollar paid over five years is worth less than a dollar today. In Till v. SCS Credit Corp. (2004), a plurality of the Supreme Court approved a “prime-plus” formula: start from the prime rate and add an adjustment for the risk that the debtor will not complete the plan, set by the court on the evidence.

The 910-day rule

Cramdown has an important exception for newer car loans. A paragraph that follows 1325(a)(9) says the value-based limit does not apply when the lender has a purchase-money security interest, the vehicle was acquired for your personal use, and the debt was incurred within 910 days before you filed. Nine hundred and ten days is about two and a half years. For other kinds of collateral, the same rule applies to debts incurred within one year before filing.

In practical terms, the date you bought the car, and how the purchase was financed, can decide whether the loan can be reduced at all. Have the purchase contract with you when you talk to a lawyer, because that date is the first thing that matters.

If the car is not worth keeping

Chapter 13 does not require you to keep a car that no longer makes sense. A plan can provide for surrendering the vehicle to the lender instead (1325(a)(5)(C)). Some people use Chapter 13 to keep the car they need while giving up one they cannot afford. Whether to keep, cram down or surrender depends on the car’s value, its condition, the loan terms and your budget after the plan payment.

Chapter 13 or Chapter 7 for your car?

Neither chapter is better in the abstract. Chapter 7 is shorter and wipes out many unsecured debts, but it rarely helps you catch up a past-due car loan. Chapter 13 takes years and requires steady income, but it can cure arrears, protect a co-signer while the case is open and, outside the 910-day window, reduce what you pay for the car. Our comparison of Chapter 7 and Chapter 13 goes through the rest of the trade-offs, and our Chapter 13 page explains how a plan works.

What to bring

• The car’s purchase or financing contract, which shows the purchase date and whether the loan financed the purchase.
• A recent statement showing the payoff amount, the monthly payment and how far behind you are.
• Any repossession or default notices from the lender.
• Information about the car’s condition and mileage, so its value can be estimated realistically.
• Recent pay stubs or other proof of income, and a list of household expenses.
• The name of anyone who co-signed the loan.

How Michelotti & Associates can help

Michelotti & Associates helps people in Chicagoland decide between Chapter 7 and Chapter 13 and keep the transportation they depend on, from its office in Oak Brook. If a repossession is close, call 630.928.0100 before the car is taken; the options are wider before it happens.

This article is general information about the law as of October 21, 2026, not legal advice about anyone’s case.

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This article is general information, not legal advice about your situation. Reading it does not create an attorney–client relationship.