[author: Win Mims]
As a result of the terms of a pawn contract, unless the pawnbroker agrees, the usual pawn transaction may not be treated in a Chapter 13 case like the usual cram-down of a motor vehicle loan. The court decisions discussing the issues which may arise in a pawn transaction do not provide a clear roadmap for treatment in a Chapter 13 case. In a perfect world, a Chapter 13 case would always be filed before the maturity date in the pawn contract. If not, any written extensions, the 30-day grace period and Section 1 08(b) of the Bankruptcy Code (60-day extension) may provide some "wiggle room" and can be used by our attorney to calculate a Final Redemption Deadline which would be the final date to file a Chapter 13 case.
In addition, in order to "redeem" the vehicle (maintain possession and reacquire full ownership of the vehicle), the court decisions require that you must take "certain affirmative steps" in the Chapter 13 case. The courts have not provided a clear roadmap of the "affirmative steps" necessary in a Chapter 13 case: however, it appears that the Chapter 13 plan must provide for full payment of the balance owed with full payment of interest. Any attempt to try to "cram down" either the balance owed or the interest rate would not be appropriate unless agreed to by the pawnbroker.
The bottom line
If you have a pawned motor vehicle, in order to maximize a free evaluation of your situation with one of our attorneys, you must bring:
A copy of the pawn contract
A copy of any written agreement to extend or continue the maturity date
A dated receipt of each of your payments or other proof of payments to the pawnbroker
Also, remember that there are pawnbrokers and then there are pawnbrokers. Although your pawnbroker has legal rights under Georgia law in a pawn transaction, in Chapter 13 cases we have filed in the past, a number of pawnbrokers have gone along with a "cram-down" of the balance owed and the interest rate.