A secured debt is one with collateral. Often in the form of a mortgage, vehicle, lien, or security interest in a specific property like a refrigerator or couch. If the debtor does not pay on the debt, the creditor can seize the property.
Keeping the Property
If you want to keep a property that creditors are holding as collateral on a loan, you will have to make payments on these loans. Bankruptcy can add flexibility in handling these debts.
A bankruptcy judge can remove the lien and make the debt unsecured so the creditor can not seize the property. This is useful for household items purchased on credit.
Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy protection, all foreclosure actions will stop, and you will be allowed to make back payments stretched out over three to five years. Sometimes this payment is lower, and the interest rate can also be lowered.
Chapter 7 Bankruptcy
When you file a Chapter 7 bankruptcy, your unsecured debt will be eliminated, giving you more of your income to pay on your secured debt.
If you have fallen behind on your “rent to own” property, the company has the right to take back their property, but they do not have the right to enter your home without your permission.
You can redeem your secured debt by paying the value of the property and not the amount owed. For instance, if you owe $5,000 on your vehicle, but the value is only $2,000, you can legally pay the creditor $2,000 and keep the car.
If you have fallen behind on your bills and worry your home will be foreclosed on or you will lose your car to repossession, contact a Mcallen bankruptcy attorney to find out how you can stop creditors actions, eliminate qualifying debt and get caught up on your bills again.