What is “cramdown” in a Chapter 11 bankruptcy?

Cramdown is a powerful legal tool in a Chapter 11 bankruptcy that helps debtors reorganize their finances by allowing them to reduce or "cram down" the amount of secured debt they owe. This allows the debtors to keep their property, like a house or car, while working out a payment plan. In Texas, cramdown works by allowing the debtor to propose a payment plan to their creditors that is based on the current value of their assets instead of the amount they borrowed. The secured debt is then "crammed down" to the new repayment amount. The payment plan may include a 3-5 year repayment period and interest rate. Cramdown can be of great benefit to debtors who can no longer afford to make payments on their secured debts and are at risk of losing their property. With cramdown, the debtor and creditors come to an agreement on a manageable payment plan that is in the best interests of all parties. Cramdown is a powerful tool for debtors who are in need of financial relief, and it should be used with caution. Debtors should be sure to seek out legal assistance from a knowledgeable attorney before filing for a Chapter 11 bankruptcy in Texas. With the help of a lawyer, debtors can ensure their rights are protected throughout the bankruptcy process.

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What is “cramdown” in a Chapter 11 bankruptcy?

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