Explain "cramming down"

[andy158]

Looks like I am heading for chapter 13 because we make too much money. I am in for $600 already for an attorney that determined I have to file 13 and does not do 13. Unfortunately I live in WV where the median income is only around 59k for a family of four compared to neighboring states that are 10k and 18k higher. I have two car loans and owe both more than what vehicles are worth. One is over 50% and the other 20% Same with a motorcycle at 30% . I keep reading about "cramming down'" balances. Could someone please explain? Is there an advantage here? I have and appointment with another attorney that does bk13 July 7. Thanx.

[oldhack]

Say, for example, you owe $10,000 on a vehicle currently valued at $8,000. If you reaffirm the loan and keep the car in your Chapter 13, the lender's secured stake in the vehicle would be "crammed down" to the $8,000 current value, and the lender would only be guaranteed that money from your plan.
The remaining $2,000 you owe today would be listed in your case as an unsecured debt, and the creditor would receive for that portion only whatever percentage 'dividend' the all other unsecured creditors receive in common. If you pay back 100% to unsecured, they'll get it all. But, if you have a minimal 20% dividend, they'll only receive $400 of that portion of your debt.
Upon successful discharge, you get the title.

[lrprn]

I keep reading about "cramming down'" balances. Could someone please explain?

For cars, IF the car was purchased more than 910 days before you file AND the car's current market value is less than you owe on the car loan, then the car's loan value an be "crammed down" (reduced) to what the car is actually worth on the current market when you list it on your bk forms. The loan amount above the car's value is wiped out once your Ch 13 finishes successfully.

However, if your car was purchased within the 910 days before filing, then you cannot cram down the car's loan value. You have to list the full loan amount when you file.