Trade-in Value and Automobile Loans After Bankruptcy Reform

Last month, we discussed that when, in 2005, Congress enacted PL 109-8, significant changes were in store for the automobile finance industry. Four years after the enactment of PL 109-8, there is as yet little literature on the real-world financial consequences of the 910 provision. Based on a comprehensive review of the legislative history of 11 USC ' 1325(a)(*), there can be little doubt that the 910 day provision covers all portions of a debt incurred for the purpose of financing an automobile, including negative equity and insurance charges. But there is heavy debate in Congress; we presented an overview of selected legal issues to prove our point. The conclusion herein continues the discussion.