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How to deal with a vehicle cramdown

Debt can threaten to rule your life, but many people avoid addressing the issue for fear that doing so will force them to liquidate their assets. While liquidation is one potential solution to debt, it is not necessarily required. In Chapter 13 bankruptcy, in fact, a vehicle cramdown may allow you to reduce the principle on your loan. Here are some things you should know about this option.

Understanding vehicle cramdown

Vehicle cramdown is a term that refers to negotiating a car's principle if the amount owed surpasses its value. According to Edmunds, cars continually depreciate in value, so it is not impossible for this to happen. If you are upside down on your car payments and considering filing for Chapter 13, a cramdown involves requesting that your creditor reduce the secured principle to the replacement value.

Keep your car and other property

A cramdown offers an alternative to losing or liquidating your vehicle. By reducing its principle to a smaller secured debt, you can free up the funds to pay off other debts while still maintaining the property that you need. A cramdown is not the only option for this, in fact. Reaffirming debts is another way to continue repaying debts on property you would like to retain

Find relief for your debt

If you preserve certain debts through reaffirmation or a cramdown, you may still discharge other debts through bankruptcy. Chapter 13 allows you to address excessive debt by restructuring payments or discharging them. This can help you get a handle on the debt that you owe and reclaim your life from this financial stress. Filing for bankruptcy may be the right option if you are seeking debt relief.

You might be wondering what legal options are available for handling your debt. Contact an attorney for more information on Chapter 13 bankruptcy, car cramdown and other chances for relieving your burden of debt.

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