{"id":37282,"date":"2022-11-11T01:29:47","date_gmt":"2022-11-11T09:29:47","guid":{"rendered":"https:\/\/pdxlegal.com\/?p=37282"},"modified":"2023-08-17T04:55:06","modified_gmt":"2023-08-17T11:55:06","slug":"chapter-13-bankruptcy-basics-cramdown","status":"publish","type":"post","link":"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/","title":{"rendered":"Cramdowns in Chapter 13 Bankruptcy: The Basics"},"content":{"rendered":"<h2><span class=\"ez-toc-section\" id=\"Bankruptcy_Attorney_in_Oregon_Portland_Bend_and_Clackamas\"><\/span><span style=\"font-weight: 400;\">Bankruptcy Attorney in Oregon (Portland, Bend, and Clackamas)<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6629da5f1f332\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6629da5f1f332\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#Bankruptcy_Attorney_in_Oregon_Portland_Bend_and_Clackamas\" title=\"Bankruptcy Attorney in Oregon (Portland, Bend, and Clackamas)\">Bankruptcy Attorney in Oregon (Portland, Bend, and Clackamas)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#How_Does_a_Cramdown_Work\" title=\"How Does a Cramdown Work?\">How Does a Cramdown Work?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#Special_Considerations_in_Cramdowns\" title=\"Special Considerations in Cramdowns\">Special Considerations in Cramdowns<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#What_are_the_Reasons_for_Cramdowns_in_Chapter_13_Bankruptcy\" title=\"What are the Reasons for Cramdowns in Chapter 13 Bankruptcy?\">What are the Reasons for Cramdowns in Chapter 13 Bankruptcy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#How_Should_I_Cram_Down_My_Loans\" title=\"How Should I Cram Down My Loans?\">How Should I Cram Down My Loans?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#What_are_the_Restrictions_for_Cramdowns_in_Chapter_13_Bankruptcy\" title=\"What are the Restrictions for Cramdowns in Chapter 13 Bankruptcy?\">What are the Restrictions for Cramdowns in Chapter 13 Bankruptcy?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#Restrictions_and_Limitations_of_each_Loan_Option\" title=\"Restrictions and Limitations of each Loan Option\">Restrictions and Limitations of each Loan Option<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basics-cramdown\/#Contact_our_Portland_Bankruptcy_Lawyers_Now\" title=\"Contact our Portland Bankruptcy Lawyers Now!\">Contact our Portland Bankruptcy Lawyers Now!<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">Cramdowns in Chapter 13 bankruptcy enables you to reduce a debt&#8217;s principal balance to the value of the asset it is secured by. Using a Chapter 13 cramdown, you may be allowed to keep your car, real estate investment, or other properties.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Filing Chapter 13 bankruptcy in Portland, Bend, and Clackamas, Oregon, can help relieve the burden of being seriously in debt. It may be daunting at first when you file for bankruptcy, but with the help of an <\/span><a href=\"https:\/\/pdxlegal.com\/\"><span style=\"font-weight: 400;\">experienced bankruptcy lawyer<\/span><\/a><span style=\"font-weight: 400;\"> in Oregon, the bankruptcy process may be greatly simplified.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bankruptcy is a tough decision. However, our bankruptcy attorney in Oregon (Portland, Bend, and Clackamas) will guide you in weighing your bankruptcy options and making the best decision. Call Michael D. O&#8217;Brien &amp; Associates now to set up a free case evaluation!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Does_a_Cramdown_Work\"><\/span><span style=\"font-weight: 400;\">How Does a Cramdown Work?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-37283 size-full\" title=\"cramdowns in chapter 13 bankruptcy\" src=\"https:\/\/pdxlegal.com\/wp-content\/uploads\/2022\/11\/chapter-13.webp\" alt=\"cramdowns in chapter 13 bankruptcy\" width=\"400\" height=\"300\" srcset=\"https:\/\/pdxlegal.com\/wp-content\/uploads\/2022\/11\/chapter-13.webp 400w, https:\/\/pdxlegal.com\/wp-content\/uploads\/2022\/11\/chapter-13-300x225.webp 300w\" sizes=\"(max-width: 400px) 100vw, 400px\" \/> A cramdown provision (sometimes known as a &#8220;cram-down&#8221;) is often used on <\/span><a href=\"https:\/\/pdxlegal.com\/bankruptcy\/secured-vs-unsecured-debt\/\"><span style=\"font-weight: 400;\">secured debts<\/span><\/a><span style=\"font-weight: 400;\"> such as a vehicle or furniture. Cramdowns are not allowed on mortgages for a primary residence.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As outlined in <\/span><a href=\"https:\/\/usbankruptcycode.org\/chapter-11-reorganization\/subchapter-ii-the-plan\/section-1129-confirmation-of-plan\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Section 1129(b) of the Bankruptcy Code<\/span><\/a><span style=\"font-weight: 400;\">, the cramdown provision allows a bankruptcy court to disregard a secured creditor&#8217;s objections and accept a debtor&#8217;s reorganization plan as long as it is &#8220;fair and equitable.&#8221;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The phrase &#8220;cramdown&#8221; refers to the belief that loan modifications are &#8220;crammed down&#8221; the throats of creditors. A cramdown may also be referred to as a &#8220;cram-down deal&#8221; as a reference to any bad arrangement imposed on creditors due to circumstances.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a <\/span><a href=\"https:\/\/pdxlegal.com\/chapter-13-bankruptcy-basic-steps\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Chapter 13<\/span><\/a><span style=\"font-weight: 400;\"> restructuring (using a cramdown), a debtor may either renegotiate a loan or risk losing everything in a Chapter 7 case, which provides secured creditors with significantly greater power.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Special_Considerations_in_Cramdowns\"><\/span><b>Special Considerations in Cramdowns<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A secured creditor often does better than an unsecured creditor in cramdowns in Chapter 13 bankruptcy, and they are usually the ones who file objections. The unsecured creditor&#8217;s strongest defense against an unfavorable reorganization plan is generally to question whether the debtor can satisfy the plan&#8217;s obligations rather than argue whether the plan is fair and equitable. The cramdown has been an effective tactic in forcing obstinate secured creditors to accept reorganization.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Reasons_for_Cramdowns_in_Chapter_13_Bankruptcy\"><\/span><span style=\"font-weight: 400;\">What are the Reasons for Cramdowns in Chapter 13 Bankruptcy?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Loans become more bearable with cramdowns. A\u00a0 cramdown can lower your monthly loan payment by spreading payments out over a longer time period. The payment term can run for the whole three- to five-year period of a Chapter 13 bankruptcy. The bankruptcy court may also intervene to reduce the loan&#8217;s interest rate. After you have paid off your loan, you will have outright ownership of the asset.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Suppose there still is a remaining $20,000 that you need to pay your creditor, however, your car&#8217;s value is only $12,000. The loan&#8217;s secured portion can be lowered to $12,000, with the remaining $8,000 reclassified as a non-priority unsecured debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These kinds of <a href=\"\/debts-survive-chapter-13-bankruptcy\/\">debts might never be discharged under a Chapter 13 bankruptcy<\/a>, or they could be discharged only partially. In any case, you will not have to worry about the unsecured part of the loan debt when your bankruptcy is complete, provided you followed the debt repayment plan as well as paid off the remaining $12,000.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Should_I_Cram_Down_My_Loans\"><\/span><span style=\"font-weight: 400;\">How Should I Cram Down My Loans?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Let&#8217;s use a car loan cramdown to demonstrate how a cramdown works since the majority of people choose Chapter 13 bankruptcy to cram down their car loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let&#8217;s say your car is worth $5,000, however, your loan debt is $10,000; with a Chapter 13 debt repayment plan, you can cram\u00a0 your loan down to $5,000 (the car&#8217;s value). The remaining $5,000 balance will be added to any other unsecured debts you may have (such as credit cards). This would mean you will probably just repay a percentage of your unsecured debt, and the remaining amount will be wiped off when your debt repayment plan is completed. This means that at the conclusion of the bankruptcy, you will own the car entirely free and clear.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Restrictions_for_Cramdowns_in_Chapter_13_Bankruptcy\"><\/span><span style=\"font-weight: 400;\">What are the Restrictions for Cramdowns in Chapter 13 Bankruptcy?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">All types of property loans are eligible for cramdowns in Chapter 13 bankruptcy, but the bankruptcy laws surrounding each type may hinder you from benefiting under Chapter 13. For example, you could cram down a:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">household goods<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">car loan<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">other personal property loans (furniture, etc.)\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">real estate mortgage<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Restrictions_and_Limitations_of_each_Loan_Option\"><\/span><b>Restrictions and Limitations of each Loan Option<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h4><b>Vehicle Cramdown in Chapter 13<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">This rule states that you must have bought the car and the loan taken out for at least 910 days (about 2 1\/2 years) before filing bankruptcy. Therefore you can&#8217;t cram down on cars you just recently purchased. There would be an exemption if you bought the car for business purposes.<\/span><\/p>\n<h5><b>The 910-Day Rule<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">If you want to cram down your car debt, you must have bought the vehicle for at least 910 days (approximately 2 1\/2 years) before filing for bankruptcy. Otherwise, a debtor may be tempted to purchase a high-priced new car just before declaring bankruptcy and then quickly cram down the loan. For lenders, the consequences would be unfair.<\/span><\/p>\n<h5><b>The One-Year Rule<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">Similar to the 910-day limit for cars, this rule covers all other personal property. It is often important if you want to cram down debts on household goods, and it requires that the products be bought at least one year previous to bankruptcy before a cramdown is permitted.<\/span><\/p>\n<h4><b>Personal Property Cramdowns in Chapter 13 Bankruptcy<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">According to the personal property rule, you must have bought the property at least 1 year before filing for bankruptcy. Except for car loans, this restriction extends to all personal property loans. Household goods, furniture, and jewelry are among the most common instances of in-store financing.<\/span><\/p>\n<h4><b>Mortgage Cramdowns in Chapter 13 Bankruptcy<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">While there are no time constraints on mortgages, you cannot do a cramdown on your residence. It can only be used for mortgages on other types of real estate property, such as investment property and rental houses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This type of cramdown is seldom utilized because it is expensive, and most who file bankruptcy do not earn enough to afford it. Why? The majority of courts demand that all cramdown loans, including cramdown mortgages, have their whole outstanding balance paid off in the 3- or 5-year Chapter 13 debt repayment plan. Given the limited time available, only a few can benefit from a mortgage cramdown.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Contact_our_Portland_Bankruptcy_Lawyers_Now\"><\/span><span style=\"font-weight: 400;\">Contact our Portland Bankruptcy Lawyers Now!<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you&#8217;re having trouble keeping up with your payments on unsecured debt, Chapter 13 bankruptcy might be your solution. The problem, though, is that the process&#8217;s complexity may raise your stress level. So, you will need the help of an experienced bankruptcy attorney. Having legal counsel will help you save both time and money.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you or someone you know needs help with debt settlement, Michael D. O&#8217;Brien &amp; Associates, P.C. is more than happy to help. Our years of experience, track record of success, and stellar reputation all combine to ensure that you get the best possible legal representation. We also provide debt relief options and estate planning services along with bankruptcy. If you are interested in any of our services, we offer initial free legal case evaluations on the majority of bankruptcy cases.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Make an appointment with our <\/span><a href=\"https:\/\/pdxlegal.com\/contact\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Portland law firm<\/span><\/a><span style=\"font-weight: 400;\"> right now!<\/span><\/p>\n<div style=\"display: none;\"><a href=\"https:\/\/pdxlegal.com\/entrepreneurial-development-loan-fund\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/the-meeting-of-creditors\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/facebook-bankruptcy-campaign\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/bankruptcy\/is-bankruptcy-right-for-me\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/facebook-bankruptcy-campaign2\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/advice-for-individuals-facing-financial-difficulties-caused-by-covid-19\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/virtual-bankruptcy\/\">Visit<\/a><br \/>\n<a href=\"https:\/\/pdxlegal.com\/sitemap\/\">Visit<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Bankruptcy Attorney in Oregon (Portland, Bend, and Clackamas) Cramdowns in Chapter 13 bankruptcy enables you to reduce a debt&#8217;s principal balance to the value of the asset it is secured by. Using a Chapter 13 cramdown, you may be allowed to keep your car, real estate investment, or other properties.\u00a0 Filing Chapter 13 bankruptcy in [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":37284,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts\/37282"}],"collection":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/comments?post=37282"}],"version-history":[{"count":4,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts\/37282\/revisions"}],"predecessor-version":[{"id":37726,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts\/37282\/revisions\/37726"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/media\/37284"}],"wp:attachment":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/media?parent=37282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/categories?post=37282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/tags?post=37282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}