Cramdowns in Chapter 13 Bankruptcy

One valuable feature of Chapter 13 bankruptcy is the ability to reduce certain loans to market value. This is called a bankruptcy cramdown.

You can use a cramdown if you are upside down on a secured loan, which means you owe more on your car than the car is currently worth. Because cars depreciate so quickly, cramdowns can be a valuable tool in Chapter 13. You can reduce your obligation on the loan to the current market value of the car.

Cramdowns can be used with other loans secured by property, such as mortgages on investment or rental property. Notably, though, you cannot cramdown a mortgage on your primary residence.

Below you'll find articles discussing rules for cramdowns, and how cramdowns work with cars and investment property.