Gideon Gratsiani, Foreclosure and Bankruptcy expert Speaks on the “Cram Down” Tool

While most people that file for bankruptcy, do so in response to some kind of financial emergency such as aggressive collection efforts from lenders or foreclosure on their homes or real estate investments, there are generally little known advantages to borrowers within the bankruptcy code that could mean a large difference to the equity they hold in their property. According to Gideon Gratsiani, a South Florida, foreclosure and bankruptcy expert, one of these tools is the “cram down”. By utilizing the bankruptcy code, a debtor who has filed a chapter 13 or chapter 11 bankruptcy with non-homestead real estate or vehicles purchased prior to 910 days before filing for bankruptcy, can obtain a court order cramming a  lien on the property or vehicle down, so that its secured only up to the actual value of the property. Once the court makes its ruling on the value, the debtor can pay off the new lower balance on its loan throughout the life of the reorganization plan, usually 3 or 5 years. The amount of the original loan that was erased from the security interest on the property becomes unsecured and discharged after the bankruptcy is complete. While this course of action is most commonly employed on vehicles, if a Debtor can afford to pay off the value of their investment real estate through however long the bankruptcy lasts, they will end the bankruptcy owning the property free and clear of the lien.