Loan Cramdowns in Chapter 13 Bankruptcy
Posted By Price Law Group
Struggling with debt can be extremely overwhelming, and in some cases it may appear that there is no way to get out from the pit. For this reason, bankruptcy has been established by the government as a way to help out the people come back from debt and start a fresh.
Chapter 13 bankruptcy specifically is considered to be a debt reorganization rather than elimination like
Chapter 7. This process means that our debt will likely be placed into one large payment that you will have to make regularly for a period of 3 to 5 years as determined by the court. This process protects you from creditors threatening to receive repayment for what you owe them, among many other benefits. That is not to say that bankruptcy is easy, however, it does allow individuals the opportunity to get back on their feet after getting deep into debt.
In some cases you may have an investment property in which your principal balance of debt (the mortgage you owe) is actually higher than the value of the home itself. In this case, chapter 13 bankruptcies allows the opportunity of what is called a "cramdown" in order to help you reduce that principal payment. Unfortunately, only specific forms of secured debt can be used for a cramdown. What makes your debt secured is that there is a security interest by your lender in the property allowing them the power to repossess in the event that you are unable to make your payments. This can include your car payments, investment properties as well as various forms of personal properties as well.
The process of a cram down can be complicating and for this reason, hiring a trusted bankruptcy attorney in your area is absolutely essential. Contact the Price Law Group today for more information on the best methods for fighting your debt, we want to help you!
For more information call us at 866-210-1722 or fill out the form below.