Reducing Loans and Mortgages in Chapter 13 (Cramdowns)
Chapter 13 bankruptcy has a powerful tool for reducing the balance owed on certain secured debts -- the Chapter 13 cramdown. With a cramdown, you can reduce the balance on your loan to the market value of the property securing the loan. Chapter 13 debtors most often use this tool for upside down car loans (meaning the debtor owes more on the loan than the car is worth) or upside down mortgages on investment property. Notably you cannot cram down mortgages on your residence. (To learn about other options for dealing with residential mortgages, check out Your Home in Chapter 13 Bankruptcy). There are some other restrictions on cram downs as well.
The below articles explain how cramdowns work, the restrictions on cram downs, and how to cram down car and mortgage loans.
In Chapter 13 Bankruptcy, you may be able to reduce the principle of a secured debt to the value of the collateral secured. Learn how it works.
If your car is worth less than the debt you owe on it, you may be able to lower, or "cram down" the loan principle. Here's how it works.
This comprehensive guide explains the Chapter 13 process, from start to finish.
Is bankruptcy the right solution for your overwhelming debts? Pick the best strategies for your situation with the information and practical suggestions in this book by best-selling author Stephen Elias.
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