The term “Cram Down” commonly refers to the procedure by which a Chapter 13 debtor pays a car creditor the value of a vehicle at the time of the filing of a Chapter 13 plan or reorganization, as opposed to what the car creditor is actually owed.

This process under current bankruptcy law is generally now limited to a vehicle that was purchased for personal use and more than 910 days prior to the filing of the bankruptcy.

The limitation on cram down does not apply where a vehicle is owned outright and the owner borrows money against the equity in the vehicle.

The security interest that the creditor takes in this type of financing arrangement is known as a “non-purchase money security interest.”

A debtor can cram down a vehicle where the car creditor has a non-purchase money security interest.

The ability to cram down can be of significant benefit to a debtor reorganizing their debt under Chapter 13.


As always, any opinions expressed on this website are just that, opinions. So if you have a question regarding bankruptcy or debt relief, then please give me a call to discuss your individual situation.  Bankruptcy, as many other areas of the law are very case or fact specific.  I pride myself on giving you the answers to your questions that are based on your individual circumstances.


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