Cramming down is the phrase used in Arizona when referring to the process of reducing a secured loan balance to match the value of the asset it is secured by. For example, let’s assume you own a vehicle in Arizona that is worth $10,000, but the loan balance on that vehicle is much higher, $18,000. In a cram-down, we can reduce the lien against that vehicle from $18,000 to $10,000. However, in Arizona, as elsewhere around the country, you cannot accomplish this in a chapter 7 bankruptcy. However, in chapter 13 cases, we routinely cram down loans for our Arizona clients. You must be careful when considering cramming down loans, however, because not all loans qualify for the cram-down process.
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You must also note that the part that has been “crammed-down,” which in our example above is the $8,000 amount above the value of the $10,000 vehicle, may still need to be at least partially repaid in your Arizona bankruptcy case. Exactly how much, if any, of that now unsecured amount that will need to be repaid will vary in each Arizona chapter 13 bankruptcy case, and is controlled by various factors that we will analyze and explain to you as part of handling your bankruptcy case. So call our office today and find out how you can benefit from the various kinds of relief afforded to you in the Arizona bankruptcy court.