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Cramming Down a Loan

Definition - What does Cramming Down a Loan mean?

Cramming down a loan refers to the process where a court will involuntarily force a reorganization plan onto a person who owes money to other persons or entities. Hence, cramming down a loan received its name because it is a reorganization plan that the court "crams down" a person's throat and forces them to follow.

Justipedia explains Cramming Down a Loan

The most frequent time when cramming down a loan occurs is during a Chapter 13 bankruptcy case that a person has filed. In this instance, any secured transaction that the individual made will be included in the cramming down a loan process. One example of a piece of property that would be subject to cramming, if they were behind payment, is a person's car. It should be noted that a person's primary residence is exempt from a cram down.

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