Secured Creditors and Bankruptcy in a Minneapolis, Minnesota
Secured creditors are those creditors with security interest in your collateral. Commonly this is houses, vehicles, boats, cabins or land. The creditor will take a security interest in the property, so if payments are not made they can get the value of their loan back from a repossession or foreclosure.
Secured debts are treated differently than unsecured debts. For example, unsecured creditors are generally dischargeable in a bankruptcy, without the need to continue making payments on the debt. With secured creditors there are two parts to the debt. First, there is a security interest the creditors has. Second, is your personal liability on the debt. When a bankruptcy is filed, your personal liability on the debt is dischargeable, the creditor will still hold the security interest though. Meaning, after your bankruptcy discharge goes through, you technically are not liable on the debt anymore, but you need to keep making the payments to keep the collateral.
A common misconception of bankruptcy with secured debts is, if you want to keep them, they are not part of your bankruptcy. This is not true, with bankruptcy you need to list all of your assets and all of your creditors. You will both sign the bankruptcy schedules under penalty of perjury and testify at the 341 hearing stating you have listed all of your assets and creditors. In chapter 7 and chapter 13 cases the secured creditors will receive notice of your intention with the property. For example, if you want to keep it, surrender it, or pay it through a chapter 13 bankruptcy plan.
General advice is, if you intend to keep secured property, please keep current with your payments.
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