More Car Info For Chapter 13 Debtors

In a follow up to yesterday’s post regarding cars & chapter 13 debtors…

This post deals with how the 9th Circuit is dealing with cars & Purchase Money Security Interests (PMSIs) in negative equity situations:

http://lawprofessors.typepad.com/

This negative equity reality may become more common as people try to trade in their SUVs for smaller vehicles in years to come.

What are the odds of big cars retaining their values? About that same as gas prices going back to $2/gallon.

In other words, probably pretty low.

So, what is negative equity as it pertains to cars? Isn’t that usually a concept that is used in the real estate world?

And wasn’t it relatively rare even in real estate until the housing bust?

You’d think so…but…

…If someone owes $30,000 on a SUV that can only be traded in for $10,000, given the oversupply – that’s negative equity.

In fact, hasn’t there been news about some dealers refusing to accept SUVs now because they are so overstocked with SUV trade ins?

Here are a couple clips on this phenomenon:

The U.S. automakers are offering discounts of $10,000 or more on some sport utility vehicles…

“Trade-in values on SUVs have decreased, in some cases significantly…”

Some dealers in San Francisco are reluctant to accept trucks and SUVs as trade-ins due to a lack of a wholesale market for these vehicles

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