What is "cram down" ??

[sos]

Hi,

I am new to the forum. My husband and I are considering filing for Chapter 13.

I'm a bit overwhelmed and nervous about all of it. Can someone please explainto me what "cram down" is?

Thank you!

[keepmine]

In a 13, if you've owned a car for over 910 days, the amount owed can be cramed down to the current mkt value.

[SMinGA]

Its for vehicle loans that you have had for 910+ days before filing. (2 1/2 years.)

Normally a car loan (if payments are made thru your plan) is a priority debt, paid ahead of non-secured debt. If your car is worth less than you owe, then the loan is broken into 2 parts. The priority/secured part is what the car is worth, and the rest is treated as unsecured debt. Unsecured debt is usually only repaid in part, discharging most of it.

Example: you bought a car 3 years ago, its now worth $7500 and you owe $12000 still. You file ch. 13, $7500 is treated as secured/priority debt on your car loan and $4500 is treated as unsecured.

Check with your attorney to see what method your district uses to value used vehicles. Where I am, they use NADA retail value. Which is pretty much the highest method and it means cramdowns don't happen often.

[sos]

Thanks for the info! What happens if you haven't had the loan for 2.5 years or longer? Do you lose the car in Chapt. 13?

[keepmine]

Thanks for the info! What happens if you haven't had the loan for 2.5 years or longer? Do you lose the car in Chapt. 13?

You have to stay current on the payments to keep it.

[sos]

Thanks keepmine!