What Is a Cram Down?
In light of recent economic troubles, some people have been talking more seriously about allowing courts to issue “cram downs”. As bankruptcy becomes more common for rebuilding households that were hit hard by market downturns and high unemployment rates, some have argued that courts have more power to help debtors. As a result, the cram down concept has become more widely known.
If you have been pushed too far financially, contact the West Palm Beach bankruptcy lawyers of Eric N. Klein & Associates, P.A. at 561-353-2800 to discuss your options with a legal advisor today.
Court Powers in Bankruptcy Cases
A cram down occurs when a bank takes action to modify the terms of a loan. In terms of the subprime mortgage crisis, many argued that cram downs were necessary to lower the high mortgage rates that debtors were facing, as creditors could not reasonably expect to receive these funds. A cram down affects loans in the following ways:
- Changes the value of a loan on a primary residence
- Manages debtor-creditor relations through bankruptcy court administration
- Possibly disrupts the value of other bundled properties that rely on loan values
However, in the United States, bankruptcy courts are not permitted to engage in cram downs. Although they have become a more widely discussed option in this economic climate, the arguments from the financial industry have thus far been sufficient to keep the courts from gaining this power.
Contact Us
The expectations levied against debtors can simply be too much, especially in a time when unemployment is high and employee benefits are low. To learn more about your legal options for addressing debt, contact the West Palm Beach bankruptcy attorneys of Eric N. Klein & Associates, P.A. by calling 561-353-2800.
