What is a Cram Down?

What is a Cram down?

Cram down is only available in chapter 13 bankruptcy and is a way to reduce the total amount you will pay to obtain a free and clear title to your vehicle. If you purchased your vehicle more than 90 days prior to filing for bankruptcy protection and the fair market value of the vehicle is less than the debt owed then the cram down option is available. In cram down you only pay the fair market value of the vehicle through the plan to obtain clear title. Why? Because every chapter 13 bankruptcy includes a liquidation analysis which begins with the following question: “What would the creditors receive if all the debtors assets were sold on the day he filed for bankruptcy protection? In this instance the creditor would receive the fair market value of the vehicle and that is why the creditor is only entitled to receive that amount through the chapter 13 plan.

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