Full question:
What is a "motion to cram-down"? Also, what is the purpose of multi pre-trials? Our builder is in bankruptcy and we have gotten copies of notices that state "motion to cram-down" and we are not familiar with this term. Also, our builder is facing a trial, but up until now, he has had several "pre-trials" which do not seem to amount to much. Tried researching both with no luck.
- Category: Bankruptcy
- Date:
- State: Florida
Answer:
A "motion to cram-down" is a bankruptcy term, particularly in Chapter 13 cases. It allows debtors to keep their collateral while paying back only the secured portion or the fair market value of that collateral in their repayment plan. For instance, if a debtor owes more on a car than its current value, they can reduce their payments to reflect the car's replacement value. The excess amount owed beyond the vehicle's value is treated as unsecured debt and is paid last in the repayment hierarchy.
The cram-down effect includes lowering the secured claim to the property's value at the time the bankruptcy plan is confirmed, extending the repayment period, and potentially reducing the interest rate to the prime rate. For example, a loan of eight thousand dollars at sixteen percent interest could be reduced to six thousand dollars payable over six years at the prime rate. If the debtor no longer wants the car, they can stop payments and abandon the plan without penalty.
Regarding pre-trials, these are preliminary hearings in a legal case where parties discuss the case's status, potential settlements, and other procedural matters. They are meant to streamline the trial process, but they may not always lead to significant outcomes. Multiple pre-trials can occur as the parties prepare for trial and negotiate terms.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.