The debtor has an outstanding car loan in the amount of $17,300, and the car has a fair market value of $10,000. The debtor reduced the car loan to $10,000. This is an example of

Question

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Reducing the car loan to match the fair market value of the car is an example of a cramdown, which is a process allowed in Chapter 13 bankruptcy. This process enables the debtor to reduce the debt on an asset (like a car) to its current market value, rather than the amount owed.

The Debtor Has an Outstanding Car Loan in the Amount