What is cramming down on your property?

Cramming down refers to the reduction of the principle mortgage balance to the current market value of your properties. This can be done if you own multiple investment properties and you file for a chapter 13 bankruptcy. Doing this will allow you to have a fair market value but at the same time, maintain positive cash flow, which may help you recover from financial difficulties. It is easier to have a Chapter 13 bankruptcy approved if these properties are your sole mean of income but if not, a bankruptcy trustee may most likely deny your petition to cram down your properties. Chapter 13 bankruptcy is considered by many as a smaller version of the Chapter 11 because it enables an investor with multiple properties to make payments to creditors under a payment plan without having to suffer from repossession of these properties.

When you file this type of bankruptcy, not only will you be able to cram down your properties, you will also rectify mortgage defaults, reinstate mortgage loans, remove junior liens on mortgages, reestablish your credit by being punctual in payments, and discharge of all debts after you accomplish the repayment plan. Of course, while Chapter 13 does have certain benefits that you can take advantage of, you have to remember that it also has certain drawbacks. For one, it can damage your credit rating for up to 7 years. It may also make it difficult for you to get loans in the future. This is why, if you are going to file for this bankruptcy, it is a must to study all its repercussions and ensure that it will work to your advantage.