Roseville Bankruptcy: Chapter 13 Cramdown

Chapter 13 bankruptcy authorizes a process called a cramdown by which debts can be reduced on secured debts.  Usually when you do not pay the bills on a secured debt, then that item will be repossessed as collateral.  Typically, you pay monthly payments, and usually the value of the item falls even faster than your payments are made.  As a result, most secured loans end up being “upside down.”  For example if you buy a car worth $20,000 and now it is worth only $5,000 but you still owe $10,000, then the value of the car is worth less than what you owe.  These type of debts can be crammed down in Chapter 13 allowing you to pay only the value of the property plus interest.  The remainder can be paid as little as a penny on the dollar.  This option is one that has benefited many of Sagaria Law’s Roseville clients.

Chapter 13 also allows you to reduce interest rates on secured loans with the exception that you cannot force a mortgage loan’s interest lower.  Unfortunately, consumers often pay 15-30% interest on their cars and furniture loans.  In Chapter 13, these predatory interest rates are reduced to the prime rate plus 1-3%, depending on the facts of your case.  Interest rate reductions has meant significant savings for our clients.

Combining a cramdown with an interest rate reduction can end up saving you a significant amount of money.  If you are behind on your payments or are stuck in a high interest loan you can’t afford, then it is time to consider a Chapter 13 bankruptcy.  Call a Roseville attorney at Sagaria Law today to schedule your initial consultation.

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