{"id":1492,"date":"2022-12-23T13:00:21","date_gmt":"2022-12-23T13:00:21","guid":{"rendered":"https:\/\/nwdebtdefense.com\/?p=1492"},"modified":"2023-01-26T13:13:23","modified_gmt":"2023-01-26T13:13:23","slug":"chapter-13-bankruptcy-cramdowns","status":"publish","type":"post","link":"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/","title":{"rendered":"Cramdowns in Chapter 13 Bankruptcy: The Basics"},"content":{"rendered":"<h2><span class=\"ez-toc-section\" id=\"Chapter_13_Bankruptcy_Cramdowns\"><\/span><span style=\"font-weight: 400;\">Chapter 13 Bankruptcy Cramdowns<\/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-66284ae9000ec\" 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-66284ae9000ec\"  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:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#Chapter_13_Bankruptcy_Cramdowns\" title=\"Chapter 13 Bankruptcy Cramdowns\">Chapter 13 Bankruptcy Cramdowns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#i\" title=\"\u00a0\">\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#What_is_a_Cramdown_in_Chapter_13_Bankruptcy_and_why_are_they_used\" title=\"What is a Cramdown in Chapter 13 Bankruptcy and why are they used?\">What is a Cramdown in Chapter 13 Bankruptcy and why are they used?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#What_Types_of_Secured_Debts_can_be_Crammed_Down\" title=\"What Types of Secured Debts can be Crammed Down?\">What Types of Secured Debts can be Crammed Down?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#What_are_the_Advantages_of_a_Cramdown_in_Chapter_13_Bankruptcy\" title=\"What are the Advantages of a Cramdown in Chapter 13 Bankruptcy?\">What are the Advantages of a Cramdown 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-6\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#What_are_the_Disadvantages_of_Using_Cramdowns_in_Chapter_13_Bankruptcy\" title=\"What are the Disadvantages of Using Cramdowns in Chapter 13 Bankruptcy?\">What are the Disadvantages of Using 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-7\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#What_are_the_Limitations_on_Cramdown_in_Chapter_13_Bankruptcy\" title=\"What are the Limitations on Cramdown in Chapter 13 Bankruptcy?\">What are the Limitations on Cramdown 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-8\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#910-Day_Rule\" title=\"910-Day Rule\">910-Day Rule<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#One-Year_Rule\" title=\"One-Year Rule\">One-Year Rule<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#Investment_Property_Mortgages\" title=\"Investment Property Mortgages\">Investment Property Mortgages<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/nwdebtdefense.com\/chapter-13-bankruptcy-cramdowns\/#Contact_our_Portland_OR_Chapter_13_Bankruptcy_Attorney_Today\" title=\"Contact our Portland, OR Chapter 13 Bankruptcy Attorney Today!\">Contact our Portland, OR Chapter 13 Bankruptcy Attorney Today!<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">Are you struggling with secured debts like a car loan, or mortgage debt? If so, chapter 13 bankruptcy may help. This chapter of the U.S. Bankruptcy Code provides a form of debt restructuring that can reduce the amount owed on certain loans and strip away second or third mortgages from your property.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A cramdown is one of the chapter 13 provisions that may be especially helpful to you. Cramdowns in Chapter 13 Bankruptcy are a powerful tool that can be used by debtors here in Portland, Salem, and Medford, Oregon, to modify their chapter 13 repayment plan and achieve financial freedom. This can often result in significant savings for debtors struggling with large amounts of high-interest debt.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Northwest Debt Relief Law Firm proudly serves Portland, Salem, and Medford, Oregon, with a <\/span><a href=\"https:\/\/nwdrlf.com\/\"><span style=\"font-weight: 400;\">bankruptcy lawyer<\/span><\/a><span style=\"font-weight: 400;\"> who understands the complexities of your <\/span><a href=\"https:\/\/nwdrlf.com\/chapter-13-bankruptcy-in-oregon\/\"><span style=\"font-weight: 400;\">chapter 13 bankruptcy case<\/span><\/a><span style=\"font-weight: 400;\">. So if you are considering filing for a cramdown in chapter 13 bankruptcy, be sure to read this article and schedule a consultation with us immediately!\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"i\"><\/span><b>\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_Cramdown_in_Chapter_13_Bankruptcy_and_why_are_they_used\"><\/span><b>What is a Cramdown in Chapter 13 Bankruptcy and why are they used?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">A cramdown in Chapter 13 Bankruptcy, as stated in the <\/span><a href=\"https:\/\/usbankruptcycode.org\/chapter-11-reorganization\/subchapter-ii-the-plan\/section-1129-confirmation-of-plan\/\"><span style=\"font-weight: 400;\">Bankruptcy Code Section 1129(b)<\/span><\/a><span style=\"font-weight: 400;\">, is a way for a debtor to modify their repayment plan and reduce the amount owed on certain secured debt. This provision of bankruptcy law allows a debtor to reduce the amount due on this secured debt to the current market value of the collateral instead of paying the total amount. Unsecured debt cannot be cramdown such as credit card debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cramdowns are especially helpful for debtors struggling with large amounts of high-interest secured debt. A Cramdown can help reduce your monthly payment, lower your interest rate or both. A cramdown can also be used to strip away second or third mortgage debt from a real estate property if it exceeds its current market value.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_Types_of_Secured_Debts_can_be_Crammed_Down\"><\/span><b>What Types of Secured Debts can be Crammed Down?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Cramdowns in Chapter 13 Bankruptcy can be used to modify the repayment plan of various types of secured debts. These include <\/span><b>auto loans, real estate loans, student loans, and other secured debts.\u00a0<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/nwdrlf.com\/chapter-13-bankruptcy-in-oregon\/reducing-your-car-debt-in-chapter-13-getting-that-car-out-from-underwater\/\"><span style=\"font-weight: 400;\">Car loan<\/span><\/a><span style=\"font-weight: 400;\"> is generally the most common type of cramdown debt, as there is often a significant discrepancy between what is owed on the loan and the current market value of the car.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Real estate loans can also sometimes be crammed down debts. <\/span><b>This happens when the amount owing on a loan exceeds the current market value of your personal property.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/nwdrlf.com\/what-is-bankruptcy\/resolve-debt-problems-filing-bankruptcy\/oregon-student-loan-law\/portland-student-loan-debt-lawyer-explains-student-loan-law\/\"><span style=\"font-weight: 400;\">Student loans<\/span><\/a><span style=\"font-weight: 400;\"> are another type of debt that can sometimes be cramdown in Chapter 13 Bankruptcy. However, it is important to note that cramdowns on student loans only apply to private student loans; they cannot be used for federally backed student loans.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other types of secured debt that may be cramdown debt in Chapter 13 bankruptcy include boat or RV loans, certain business credit cards, and some tax debts. In each case, cramdowns can help reduce total payments or lower interest rates to make them more manageable for struggling debtors.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Advantages_of_a_Cramdown_in_Chapter_13_Bankruptcy\"><\/span><b>What are the Advantages of a Cramdown in Chapter 13 Bankruptcy?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Using cramdowns in Chapter 13 Bankruptcy has several advantages that make it an attractive option for many individuals such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cramdowns can help reduce total payments or lower interest rates to make them <\/span><b>more manageable.<\/b><span style=\"font-weight: 400;\"> This is especially helpful for borrowers struggling with large amounts of high-interest debt.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cramdowns can also be used to <\/span><b>reduce the amount owed on certain secured debts<\/b><span style=\"font-weight: 400;\">. This allows debtors to keep their homes and cars even when they owe more than the current market value of these items.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cramdowns <\/span><b>can strip away second or third mortgages<\/b><span style=\"font-weight: 400;\"> from a property if they exceed its current market value. This is an excellent way for debtors to save money by reducing their overall debt burden.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It&#8217;s crucial to remember that cramdowns are only sometimes available in all cases; each situation must be evaluated separately based on individual circumstances, and creditors must agree to any proposed modifications before they can take effect.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Disadvantages_of_Using_Cramdowns_in_Chapter_13_Bankruptcy\"><\/span><b>What are the Disadvantages of Using Cramdowns in Chapter 13 Bankruptcy?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The disadvantages of using cramdowns in Chapter 13 Bankruptcy should not be overlooked. Debtors should understand that cramdowns may lower their credit score and could negatively impact their ability to borrow money in the future.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cramdowns <\/span><b>may also increase the amount of time required before a debtor is able to secure fresh financing or open new accounts with creditors.\u00a0<\/b><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Another disadvantage of cramdowns is that debtors must prove to a bankruptcy court that repaying their debts in full would be too difficult and would cause an <\/span><b>\u201cundue hardship\u201d for them or their families<\/b><span style=\"font-weight: 400;\">. In order to do this, debtors must submit documentation showing how much income they have, how much debt they owe, as well as other information related to their financial situation.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If a debtor cannot provide evidence that proves an undue hardship exists, then a cramdown may not be approved by the bankruptcy court and they will still be required to pay back their debts in full.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cramdowns can also require debtors to make payments over a longer period of time than other types of bankruptcy proceedings, such as <\/span><a href=\"https:\/\/nwdrlf.com\/chapter-7-bankruptcy-lawyer\/\"><span style=\"font-weight: 400;\">Chapter 7 bankruptcy<\/span><\/a><span style=\"font-weight: 400;\">. This means that even though cramdowns may reduce total payments or lower interest rates, it could take significantly longer for debtors to become debt-free than with other forms of bankruptcy filings.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finally, cramdowns also require additional paperwork and there may be additional legal fees associated with bankruptcy filing for one. Debtors need to understand these additional costs so they can factor them into any calculations when deciding whether or not cramdown is right for them.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cramdowns can be useful for debtors struggling with large chunks of high-interest secured debt. However, it&#8217;s crucial to understand any potential drawbacks as well as the burdens associated with filing for one before deciding if cramdown is the right option.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Limitations_on_Cramdown_in_Chapter_13_Bankruptcy\"><\/span><b>What are the Limitations on Cramdown in Chapter 13 Bankruptcy?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To avoid any unfairness caused by individuals attempting to cram down recently acquired property, Congress has enforced particular limitations on when this action can be taken. The guidelines correspond with the type of asset safeguarding the debt an individual wants to cram down.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"910-Day_Rule\"><\/span><b>910-Day Rule<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">910-Day Rule is a formal restriction set out by Congress to protect both the individual filing bankruptcy and their creditors. This rule prevents individuals from purchasing an expensive asset shortly before they declare bankruptcy and then cramming down the debt associated with it. The 910-Day Rule ensures that everyone is treated fairly during the bankruptcy process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"One-Year_Rule\"><\/span><b>One-Year Rule<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This rule requires individuals to own goods they purchase for at least one year before they can decrease the debt associated with them when filing bankruptcy. The intention behind this regulation is twofold: it prevents people from attempting fraud against their creditors while also encouraging the responsible use of private possessions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Investment_Property_Mortgages\"><\/span><b>Investment Property Mortgages<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under the Chapter 13 Bankruptcy code, a restriction is placed on Investment Property Mortgages when it comes to cramming down the debt structure. These types of loans can become very difficult for borrowers to pay off such mortgages because of the three to five-year timeframe limitation.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Contact_our_Portland_OR_Chapter_13_Bankruptcy_Attorney_Today\"><\/span><b>Contact our Portland, OR Chapter 13 Bankruptcy Attorney Today!<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When it comes to cramdowns in Chapter 13 bankruptcy, the answer to whether or not it is worth it depends on the individual situation. Cramdowns can present both benefits and risks when considering filing for <\/span><a href=\"https:\/\/nwdrlf.com\/chapter-13-bankruptcy-in-oregon\/\"><span style=\"font-weight: 400;\">Chapter 13 bankruptcy<\/span><\/a><span style=\"font-weight: 400;\">. It is important for individuals contemplating this option to weigh all possible scenarios carefully so they understand exactly what they are getting into before committing themselves financially.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At Northwest Debt Relief Law Firm we know cramdowns in Chapter 13 can be confusing and intimidating. That&#8217;s why our <\/span><a href=\"https:\/\/nwdrlf.com\/contact\/\"><span style=\"font-weight: 400;\">experienced bankruptcy attorney <\/span><\/a><span style=\"font-weight: 400;\">is here to give you legal advice through the process. Let us help you navigate cramdowns in Chapter 13 bankruptcy and get back on the path to financial freedom.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Call us today for free debt solution consultations and get on the path toward financial freedom! Don&#8217;t wait. Start your cramdown in Chapter 13 bankruptcy today!<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Chapter 13 Bankruptcy Cramdowns Are you struggling with secured debts like a car loan, or mortgage debt? If so, chapter 13 bankruptcy may help. This chapter of the U.S. Bankruptcy Code provides a form of debt restructuring that can reduce the amount owed on certain loans and strip away second or third mortgages from your [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1493,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39,40],"tags":[],"_links":{"self":[{"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/posts\/1492"}],"collection":[{"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/comments?post=1492"}],"version-history":[{"count":2,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/posts\/1492\/revisions"}],"predecessor-version":[{"id":1495,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/posts\/1492\/revisions\/1495"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/media\/1493"}],"wp:attachment":[{"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/media?parent=1492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/categories?post=1492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nwdebtdefense.com\/wp-json\/wp\/v2\/tags?post=1492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}