You can do that to vehicles but they recently changed the law; you have to have had the vehicle for more than two-and-half years to be able to do that. We do that though because of vehicle’s, what we call, rapidly depreciating asset. But we have done it on second houses too. We have several cases where people are basically buying their second house through the Chapter 13 plan and discharging the remainder of the liability. That was very popular in 2010 and 11 when the property values plummeted and then, people were so far under water.
Those are the main reasons that I would put somebody into a Chapter 13. Some of the other reasons are to strip a lien. If you have multiple liens on a property but the value of that property does not exceed the first mortgage, you can actually reclassify those liens to second, to thirds as unsecured debt and get that removed from the property, not just discharged but removed from the property if you make it all the way through the bankruptcy plan to discharge. That’s what we call Lien Stripping. You can also clamp a property down to current market value. If you own multiple properties and you have investment properties that are worth less than what you owe on it, you can actually pay that property in full through the plan and discharge the remaining balance so that you only pay what the property is worth at the time of filing.
Another reason would be to reduce an interest rate on a car loan. A lot of people, if they have a bad credit, they get bad interest rate from the car loans, 20 or 30 per cent interest, which is horrible for a car loan. The maximum interest rate you’re going to pay in a Chapter 13 is what we call Prime Plus. By now, the prime interest rate is 3.25 per cent in that way for a while, plus 1 to 3 per cent. So, you’re looking at a range of 4.25 to 6.25 per cent, which is much better than the 20/30 per cent interest that some people have on their car loans.