The # 4 reason for choosing to file a Chapter 13 bankruptcy is that you maybe able to cram Down" certain of your secured debts.

Using a cram down procedure allows you to lower the amount that you owe on most secured debts such as a car or furniture and in some instances mortgages on real estate to reflect the value of the assets. Chapter 13 bankruptcy plans allow you to lower the amount that you owe or the interest rate being charged on most secured debts by a process called a "cram down". Secured debts are those that if you do not pay, then you will have to return that item, such as a car, furniture or house (however, the cram down option is not available for your house except under very limited circumstances). When you finance a car or furniture, you typically make a number of monthly payments to repay the loan. In most cases, the value of the item you are financing decreases faster than the loan is being repaid (for example, a car purchased two years ago is now worth less than the amount still owed on the loan even though every payment has been paid). This is known as being "upside down." A year or two after you make a purchase, the value of the item you are paying for is usually much less than the remaining balance owed. Debts like these can be "crammed down" in Chapter 13, by paying the value of the property (usually your car or furniture) in full plus interest with the remaining balance paid as little as a penny for every dollar owed BUT THERE ARE EXCEPTIONS so check with your lawyer to see if you can reduce the interest that you have to pay on a secured loan. Many people have car or furniture loans where they agreed to pay 15%-30% interest, and sometimes even more. In a Chapter 13 bankruptcy you may be able to reduce not only your principal but your interest rate as well.

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