Cramdown in Chapter 13 Bankruptcy
Cramdown in Chapter 13 Bankruptcy is an option for debtors to reduce the amount of certain secured debts. It allows a debtor to keep certain collateral, such as a car or home, while lowering the principal balance and interest rate of that debt. This process can help those with limited income who are struggling to afford their monthly payments on secured debts.
The Cramdown process requires the debtor to file a motion with their bankruptcy court in order to obtain approval from creditors and the court. The motion must show that the value of the collateral has decreased since it was purchased or refinanced, or that even at its current value, it exceeds what they can afford to pay over time according to their budget. The creditor then has an opportunity to object and present evidence as part of this process.
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