Cramdown in Chapter 13 Bankruptcy
If you're considering Chapter 13 bankruptcy, you may be wondering if a cramdown is possible. A cramdown is when the court approves a reorganization plan that pays creditors less than what they're owed. It's important to know that not all creditors are eligible for a cramdown and that there are certain requirements that must be met.
In order to qualify for a cramdown, the debt must be secured by collateral, such as a car or home. The value of the collateral must be less than the amount owed on the debt. For example, if you owe $20,000 on your car loan and your car is only worth $15,000, you may be able to get a cramdown.
Not all creditors are eligible for a cramdown. Priority creditors, such as child support or alimony payments, cannot be crammed down.
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