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CH 7 Cramdown for investment property - how does it work?

Norfolk, VA |

after the cramdown process (investment property) in a CH7, can the CH7 be converted to a CH13? Investment property in foreclosure, 50% underwater, currently leased.

Attorney Answers 3

Posted

Cramdown (forcing the lender to accept actual value with payments over time) is a chapter 13 process. The chapter 7 equivalent is redemption (lump sum payment of actual value). So cramdown does not work in a chapter 7, and you question is not answerable. Best to consult with an attorney who knows these things.

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7 comments

Asker

Posted

CH7 - at what point in the plan does the lump sum payment occur?

Teri E Johnson

Teri E Johnson

Posted

There is no "plan" in a Chapter 7. A Chapter 13 involves a "plan." A motion to redeem would be filed while the Chapter 7 is open.

Asker

Posted

Does CH11 allow for a plan longer than 5yrs?

Asker

Posted

Walton - this case prompted the CH7 cramdown question: In re: Mark T. Lavelle, et. al (09-72389-478, Eastern District of New York).

Alan D. Walton

Alan D. Walton

Posted

That case did not involve a cram down. It involved a lien strip.

Asker

Posted

removing a lien, stripping it off....essentially a cramdown right?....

Alan D. Walton

Alan D. Walton

Posted

No. See my original answer. A lien strip means there is no equity whatsoever, and usually refers to second mortgages on real estate, or liens that impair a Debtor's exemption.

Posted

Redemption is for personal property. If you convert, you will need to qualify for a 13 (may be a problem if you exceed the debt limits) AND you need a plan that can pay off the value over 3-5 years. See local lawyer for a complete review.

Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.

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Asker

Posted

does CH11 allow for a plan longer than 5 years?

Posted

A "cramdown" can occur only in a Chapter 13, not a 7, as my colleagues have noted.

I hope you found this response to be of assistance. This response shall not be considered the rendering of legal advise but instead a general response to a general question. While Avvo is a wonderful resource, nothing can be a substitute for an in-depth consultation with an attorney in the jurisdiction in which the law is to be applied. This response shall not be deemed to create an attorney-client relationship, nor shall it create an obligation on the part of the attorney to respond to further inquiry from the questioner.

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