Cramdown

Categories: Credit and Debt, Bankruptcy Assistance, Legal, ,

In chapter 13 bankruptcy, a reduction in the amount of a secured debt the debtor must repay to the replacement value of the collateral securing the debt. For example, if a debtor owes $5,000 on a car that's worth only $3,500, a cramdown would reduce the amount of the debt that had to be repaid in chapter 13 to $3,500.Learn how a cramdown works in our section on Reducing Loans and Non-residential mortgages in chapter 13 bankruptcy.