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 Chapter 13 Bankruptcy in most states, including New York. Chapter 13 Bankruptcy is a form of debt reorganization where your debts are reorganized and a repayment plan is created. This repayment plan is based on your income and debts. In certain cases, secured debt can be reduced in Chapter 13 Bankruptcy. One way to reduce secured debt is through a process called “lien stripping.” When lien stripping is used in Chapter 13 Bankruptcy, you may be able to reduce the amount of a secured debt by the amount of any excess value. For example, if you have a mortgage that is worth more than your home’s current value, you may be able to strip away the excess value and reduce your debt. Another way to reduce secured debt is to modify the terms of the loan. Through a process called “cramdown,” you may be able to negotiate a lower interest rate or a longer repayment plan. In some cases, you may even be able to lower the principal amount of the loan. In New York, it is possible to reduce your secured debt when filing for Chapter 13 Bankruptcy. However, these processes can be complicated, so it is important to speak with an experienced bankruptcy lawyer about your situation.

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