{"id":5607,"date":"2020-05-13T13:18:25","date_gmt":"2020-05-13T13:18:25","guid":{"rendered":"https:\/\/mcintirelaw.com\/?p=5607"},"modified":"2023-05-05T01:24:19","modified_gmt":"2023-05-05T01:24:19","slug":"chapter-13-bankruptcy-cramdowns","status":"publish","type":"post","link":"https:\/\/mcintirelaw.com\/chapter-13-bankruptcy-cramdowns\/","title":{"rendered":"Chapter 13 Bankruptcy Cramdowns"},"content":{"rendered":"

If you\u2019re financially struggling, declaring bankruptcy may be your path to debt relief. Bankruptcies are known to be effective in addressing financial problems, and the different types of bankruptcy in the bankruptcy code ensure that there is a bankruptcy chapter that specifically suits your financial circumstances. For instance, if it\u2019s your wish to continue debt payments after filing bankruptcy on the condition that you be able to keep most of your assets, Chapter 13 (reorganization) is probably the filing chapter for you.<\/p>\n

\"chapter Filing a personal bankruptcy petition under Chapter 13 leads to several benefits, one of them is the option to do a \u201ccramdown.\u201d If you declare bankruptcy under this chapter, you may \u201ccram down\u201d certain debts. Chapter 13 filers can reduce the owed balance of a debt to the value of its attached property. Which debts qualify? The ones with a security interest paid to the lender, who may also repossess the asset if the debtor doesn\u2019t make debt payments.<\/p>\n

So, if you owe $20,000 in car loan on a vehicle that\u2019s only worth $12,000, you can have it sorted into two types of debt when you file for bankruptcy<\/a>. The value of the car is categorized as the secured part of the debt, and the remainder is regarded as non-priority unsecured debt. In Chapter 13 bankruptcy<\/u><\/a> cases, the bankruptcy process does not guarantee the payment of these non-priority unsecured debts. They usually end up unpaid or just partially paid because, once you\u2019re done carrying out the repayment plan, the secured portion of your car loan included, you\u2019re no longer obliged to pay off the unsecured part.<\/p>\n

Chapter 13 cramdowns aren\u2019t limited to car loans. They can be applied to any other similar secured debt like an investment home mortgage and or a loan involving furniture or valuable personal items. As a rule, primary residence mortgages may not be crammed down, but they can be allowed if certain requirements are met.<\/p>\n

<\/span>How Do Cramdowns Benefit Debtors?<\/span><\/h2>
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