June 10, 2010

What is a Secured Debt?

A Sacramento bankruptcy lawyer clarifies 'What is a Secured Debt?'

A "secured" debt is a debt that is "secured" by collateral. A secured creditor has the right to repossess a piece of property in the event of a payment default. The most common examples of "secured" debts are mortgages and car loans. Most people realize that a car can be repossessed if they fall behind on their car payments. Other types of "secured" debt are in-store financing for furniture, electronics, etc... Title loans on vehicles and financing companies that ask for a household good listing are also "secured" debt.

If you want to keep your car, keep making the payments. If you want to keep your furniture, generally, you must keep paying that creditor. So, if you owe "secured" debt and you want to retain the collateral, the general rule is that you must pay these creditors.

In Chapter 13 bankruptcy it is sometimes possible to negotiate better terms with the secured creditor. In Chapter 7 the general rule is that secured creditors do not renegotiate terms. This negotiation process and agreement is referred to in the bankruptcy court as a "reaffirmation." "Secured" debts also get better treatment in Chapter 13 repayment plans because the law requires that a Chapter 13 plan must repay the "value" of the collateral + interest and then the "unsecured" portion of the claim gets treated as a general "unsecured" debt and can be paid pennies on the dollar. It’s a split claim.

If you have questions regarding Bankruptcy in Sacramento please contact us at (916) 492-6020 in Sacramento or (916) 724-1690 in Roseville for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced Sacramento Bankruptcy Attorneys. After you have spoken with one of our Sacramento bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Sacramento Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or legal debt settlement case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento and Roseville!

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