BANKRUPTCY—CHAPTER 11–TWO EXAMPLES OF A SUCCESSFUL “CRAMDOWN” ON DEBTS SECURED BY DEBTOR’S RESIDENCE AND RENTAL PROPERTY
Our client filed a chapter 11 bankruptcy proceeding. Client owned a primary residence with a First Deed of Trust securing a loan of $780,000 and a second Deed of trust of $498,981. Client also owned a rental property with a loan of $636,793. By filing two separate actions in the bankruptcy court, we were able to reduce the loan secured by the second Deed of Trust on the residence to $150,000. The loan on the rental property was reduced to $375,000. Through aggressive lawyering, we were able to save our client over $600,000.
While the rules governing “cramdowns” are complex, having a knowledgeable bankruptcy attorney can help you avoid a lot of debt—including debt secured by real property.
CRAMDOWNS ON AUTOMOBILE LOANS.
Another frequent cramdown action relates to automobiles. If you purchased your car more than two and a half years before you file chapter 13 bankruptcy, we can “cram-down” the loan on the car to the value of the car at the time you file. So if your car is worth $10,000 and you owe $20,000, and you bought your car more than two and a half years before filing, we can, in a chapter 13 bankruptcy “cramdown” the amount of the debt to $10,000.