5 Cram Down Rules in a Chapter 7 Car Loan

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January 27, 2012

If you are considering cram down rules in chapter 7 for a car loan you probably have some questions. Knowing what cram down rules are, as well as chapter 7 bankruptcy will guide you through the information you will need. 

Chapter 7 Bankruptcy

Chapter 7 bankruptcy allows for you to claim bankruptcy, but still maintain possession of your property, including vehicles and homes. You are given the opportunity to file for chapter 7 bankruptcy and clean your credit for either a clear slate or by working with a credit advisor. Also, get with your creditors to make arrangements to pay back what you can. Different states provide different rules and fees regarding your own personal chapter 7 bankruptcy proceedings.

Cram Down Rules

Cram down is involuntary on the part of the creditor and the debtor. The courts, during bankruptcy proceedings, will determine the lien and how much the creditor will benefit from the service. The creditor will hold the lien against the property even if the property is held by the debtor. It allows for a restructuring of the original debt in order to provide that the debtor may be able to more easily secure and complete the debt for a car loan. Once the cram down amount has been satisfied, the creditor is to release the lien and leave the debt alone.

Bankruptcy Car Loans

Bankruptcy is a court managed determination of the debts of a person who has found themselves financially unable to meet the requirements of their creditors due to unemployment, reduction in funds, or just overextending their finances. Car loans open bankruptcy tells the creditor how much they can expect to receive from the debtor after they have filed and been approved for bankruptcy.


Sometimes it is apparent the debtor would be able to fulfill the requirements of their debts if the creditor would try to work with them. Unfortunately this does not always happen. Car dealerships like any other company are in the business of making money. If your needs and limitations are not being considered favorably by your car dealership, then you may wish to consider filing for chapter 7 bankruptcy. With the ability to utilize the law involving cram down of your rates to pay, you will be less likely to lose your car and more likely to be able to pay for it on your terms. Or at the very least, more reasonable terms than the original contract.

Car Loans

Even if you are in bankruptcy you can purchase or keep your assets, and even your car. In this way you will still be able to go to work, get paid, and pay your bills. The unreasonable methods of the car dealership will no longer be a problem for you and you will find that the courts will work well as a mediator between you and the dealership, in order to make the best and most amicable situation to suit both of your needs.

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