Is it possible to reduce the amount of my secured debt in Chapter 13 Bankruptcy?

Yes, it is possible to reduce the amount of your secured debt in a Chapter 13 Bankruptcy in California. A secured debt is a debt that is backed by an asset, such as a car loan or a home mortgage. Under Chapter 13 Bankruptcy law in California, a debtor may opt to reduce the amount owed on a secured debt if they can prove that the amount they owe is more than the value of the asset. In Chapter 13 Bankruptcy, the debtor is put on a repayment plan that lasts between three to five years. During this period, the debtor must make payments to the Trustee in charge of the Bankruptcy case. In some cases, part of the payment can go towards reducing the amount of the secured debt. For example, if you owe $15,000 on a car loan but the car is only worth $10,000, you may be able to negotiate with your creditor to reduce the amount of the secured debt to the market value of the car. This is called a "cram-down" and can significantly reduce the amount of the secured debt. In addition, any payments made to creditors during the repayment plan could be used to reduce the amount of the secured debt. If, at the end of the repayment plan, the debtor has paid more than the original value of the asset, the secured debt is considered fully paid and discharged. Keep in mind that getting a secured debt reduced can be a difficult process and each case is different so you should speak to an experienced bankruptcy attorney in California to understand the best course of action for your situation.

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