Secured Debts

January 24, 2013 // Uncategorized

In a typical Chapter 7 bankruptcy case most, if not all, of your unsecured debts will be cancelled. If you have any secured debts, some additional steps might be necessary. When you come to the Law Office of Yelena Kalika, she will help you determine whether any of your debts are secured debts and advise you on the steps that you need to take to protect your secured property.
A secured debt consists of your personal liability for a debt and the creditor’s legal claim on the property that secures the debt. Bankruptcy eliminates your personal liability. As a result, the creditor cannot sue you to collect the debt. However, the creditor’s legal claim will stay with the property. That legal claim is called a lien and will stay with the property, even if you give it to someone else.
When you file for Chapter 7 bankruptcy, you get a chance to take additional steps to eliminate or reduce liens. You can choose to eliminate the liens on certain kinds of exempt secured property and can keep such property without paying anything to the creditor. You can also redeem the property by paying the creditor not to take your secured property. Finally, you can surrender the secured property to the creditor.
If you do nothing to eliminate your liens while your bankruptcy case is still open, the lien will survive your bankruptcy. If the property is a house or a car and the creditor does nothing, the lien simply remains on the property until you sell it. The lien will be paid out of the proceeds of the sale.

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