The term “cramdown” refers to a situation in bankruptcy in which secured creditors are required to accept a reduction in what is owed.
Interest rates, payment amounts and principal balances may be lowered, or “crammed down” in order to facilitate a debtor’s ability to pay. In the recent mortgage crisis, cramdowns were prominent in bankruptcy proceedings to assist many debtors facing foreclosure.
In a Chapter 7 or 13 bankruptcy proceeding, cramdowns may be applied to secured debts such as property mortgages (except on the debtor’s primary residence) or car loans. With a cramdown Chapter 13 debtor might be granted a longer period in which to pay; while a Chapter 7 bankruptcy debtor may see secured liens or debts disappear as a result of the cramdown modification.
The cramdown mechanism in bankruptcy is one any creditor would prefer not to encounter. Whatever the situation, however, the proactive assistance of an experienced creditor’s rights attorney can be the best-advised first step for any creditor asserting claims in a bankruptcy.
Working with an experienced, knowledgeable Arizona creditor’s attorney can help tremendously when evaluating a bankruptcy filing. If you would like more information about cramdowns in bankruptcy, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.
The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters. We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.