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If you’re struggling with debt and considering filing for Chapter 13 bankruptcy in Raleigh, NC, you may feel overwhelmed and uncertain about your options. It’s natural to worry that your debt is too big to handle, especially if you’re unfamiliar with the bankruptcy process.
As your bankruptcy lawyer in Raleigh, Attorney Weik can help you maximize all the powerful tools of Chapter 13. This includes applying a cramdown to your eligible debts. Let’s take a closer look.
Cramdowns Under Chapter 13 Bankruptcy
A cramdown is a legal process that allows a bankruptcy court to “cram down” or reduce the amount of a debt in a Chapter 13 bankruptcy case.
This process is only available for certain types of debts, such as car loans, and is used to help the debtor make their Chapter 13 payment plan more affordable.
Here’s how a cramdown works under Chapter 13 bankruptcy in Raleigh, NC:
- The debtor proposes a Chapter 13 payment plan to the bankruptcy court.
- If the value of the secured asset is less than the amount of the debt, the bankruptcy court allows the debtor to pay off the debt in the Chapter 13 payment plan based on the value of the asset, rather than the full amount of the debt. This is known as a “cramdown.”
- For example, if the debtor has a car loan of $20,000 and the value of the car is only $15,000, the bankruptcy court may allow the debtor to pay off the car loan in the Chapter 13 payment plan based on the value of the car (i.e. $15,000) rather than the full amount of the debt (i.e. $20,000).
Overall, a cramdown is a helpful tool for people with a lot of debt in a Chapter 13 bankruptcy case, as it allows them to pay off their debts in a more affordable way.
What Debts Are Eligible for a Cramdown in Chapter 13?
To be eligible for a cramdown, you must meet certain criteria, including:
- The debt must be secured by collateral, such as a car.
- The debt must be for a purchase made more than 910 days (about 2.5 years) before you filed for bankruptcy
- The value of the collateral must be less than the amount you owe
If you meet these criteria and are filing for Chapter 13, you may be able to use a cramdown to lower your secured debts and make your bankruptcy plan more manageable.
It’s important to speak with your Weik bankruptcy attorney in Raleigh NC to determine if you qualify for a cramdown and to understand how it may impact your bankruptcy case.
Wrapping It Up
Filing for bankruptcy can be a difficult and emotional decision, but it can also provide much-needed relief and a fresh start.
Remember that you are not alone in this process. As your bankruptcy lawyer, Attorney Weik will advocate for you every step of the way. Most importantly, expect to be treated with kindness and dignity through this challenging time in your life.
Call Weik Law Office today at 919-845-7721 for a free consultation, and set up a time to speak with one of our friendly professionals.
In the meantime, read what previous clients have to say about working with Attorney Weik, or learn more about filing for bankruptcy in Raleigh.