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Bankruptcy Cram Down?

What is cram down?

Cram down is a term used in bankruptcy law. It refers to the Chapter 13 provision which would allow an individual that owes money (debtor) to keep collateral as long as they give repayment of the secured portion or fair market value of the collateral in their repayment plan.

Cram down would allow an individual to reduce their mortgage payment if the home is worth less than what the individual actually owes. The difference of the value of the home and what is actually owed is called the unsecured portion. The unsecured portion of the mortgage would then be of a lower priority for payment.

What are the requirements to get approved for a cram down bankruptcy

The term cram down refers to a provision in a Chapter 13 bankruptcy. It is not a form of bankruptcy on its own. It can be used to strip away a second mortgage or third mortgage if first mortgage exceeds the fair market value of the property. The now unsecured second mortgage and or third mortgage would be considered in a Chapter 13 plan as an unsecured creditor. Bankruptcy courts do not have the power to reduce the principal amount of the mortgage, resulting in still owing the first mortgage but with possibility of stripping the second mortgage.

We just completed a cram down Chapter 13 bankruptcy but forgot to include our motor home. We just want to give the motor home back to the person we bought it from. Can we be sued?

In many cases, you could be sued if you do nothing. However, you can file an amended plan and include the motor home. Then you would list that you want to reject that debt. The money left owed on the debt is then discharged. You then don’t owe any money to the person you bought the motor home from and the property is returned to them. Filing the amended plan saves you from being sued.

In a Chapter 13 cram down bankruptcy for an auto loan 30 months old how is the value of the auto assessed?

The value assessed is the fair market value. This value can be determined through an appraisal. Online appraisals are considered estimate values. A valuation hearing might occur if the creditor disagrees with the valuation you received. With automobiles the fair market value usually refers to the retail value of the automobile. The rule is that the loan must be at least 910 days old, not thirty months. Even though thirty months is close it is not exact.

Having the right information and understanding of the cram down provision in Chapter 13 bankruptcy can help when dealing with questions on the cram down provision. Experts can help answer questions defining cram down or the requirements of the cram down provision. Get the answers fast and affordably by asking an Expert online.
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