another cram down question...

[95kindebt]

If we cram down our car payment which is $515 a month, we owe 14k left on a car thats currently worth $5780 then am I correct when I assume we don't make payments directly to the car finance place, they're made through the plan right?
So then that increases our DMI?

[justbroke]

Strange, I thought I answered this question already. When you cramdown the car, it has to be paid "in" Plan... through the Trustee.

It does not increase your DMI at all. Actually, it gives you more "spending" money.

[95kindebt]

you did answer about the payment being in the plan, but I wasn't sure how it affected the DMI

[justbroke]

you did answer about the payment being in the plan, but I wasn't sure how it affected the DMI

I did elude to this, but it's interesting how it affects your "allowable expenses". While your DMI won't change it will put more money in your pocket for budgeting, and here's why.

Let's say that your DMI is $200/month. Let's say that your current car payment (before cramdown) is $400/month. Your "ownership allowance" for the car is $489/month. So, on your Form B22C, you put $489-400 = $89 for your car allowance. And that gave you a DMI of $200/month.

If you cramdown the car, and the new payment on the car is $200/month (not $400 as it was before cramdown), your "ownership allowance" less your secured payment would be $489-200=$289. Your DMI didn't change, but now you have $289 rather than $89 in your allowable expenses. That's $200/month more in your budget, even though the DMI didn't change!

Interesting, isn't it! The car allowances are a great way to get more money into your budget. The cheaper the car payments are, the more you have in your budget (allowances)!

So, the bottom line is that a cramdown on a vehicle, while not changing your DMI, does give you more money in your "spending" budget!

[95kindebt]

cool!! Thanks for explaining it (again) in lay mans terms! You are an asset to this board!!