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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I understand that I can Cramdown a 2nd mortgage of an investment

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I understand that I can Cramdown a 2nd mortgage of an investment property in CH13. How long does the property need to be in investment status to qualify as investment and therefore for Cramdown? What evidence is needed to show it as investment?

cfortunato :

Hi - my name is XXXXX XXXXX I'm a Bankruptcy and Consumer Protection attorney here to assist you.

cfortunato :

A second mortgage can be "crammed down" in a Chapter 13 - whether the property is investment property or the debtor's residence.

1) Aside from that, there is no minimum length of time a property must be investment property. What matters is the status of the property at the time a Bankruptcy if filed.
2) Any property is investment property if the debtor does not live in the property. Unless someone provides evidence to the contrary, the debtor's statement under oath that the debtor does not live in the property would be sufficient evidence to prove the property is investment property. This is because the Bankruptcy trustee presumes what the debtor states under oath is the truth.

I think this is what you wanted to know. If not, please let me know.
Thank you.
Customer: replied 3 years ago.

Thank you. I am glad to hear that but need to comment the following. Two attorneys, one personally and the other in class, said one can cram down only on investment properties. Can you please double check? Maybe they are right on paper or in a particular scenario, but in reality or in specific scenarios, it is as you say. Regards

I think the following may clear things up for you:
1) Until very recently, only second mortgages of investment properties could be crammed down in a Chapter 7. (Currently, in Florida, a debtor's second mortgage on a residence can also be crammed down in a Chapter 7 - but this is being contested.)
2) Second mortgages on all real estate - investment properties and the debtor's residence - can be crammed down in a Chapter 13. In fact, cramming down second and third mortgages for a debtor's residence is one of the main reasons for filing a Chapter 13.

I believe the confusion lies in not having distinguished between a Chapter 7 and a Chapter 13 Bankruptcy.

Customer: replied 3 years ago.

Can you provide the statutes that allow for cramdown in ch7 in both investment and residence and for ch13 on both ch 7 and 13?

Here is the Florida case for Chapter 7 (there is no statute):
The lien-stripping statute for Chapter 13 is Bankruptcy Statute 506(a)1 & 1325(a)(5)(B)(iii)(II).
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