December 10th, 2007 by Questions
Hi, I would like to know if secured debt can be erased? I have some secured debt: a car loan and a personal loan with my tv and stereo used as collateral. I would like to know what happens to these assets? Do I lose them and owe the rest of the loan minus the collateral? Does that in turn make the debt unsecured? What about keeping the assets?
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December 11, 2007 at 9:17 am, A licensed trustee said:
If the debts have been properly secured against your assets (TV and car) then the secured creditor has the right to repossess the assets if you file for bankruptcy. If they do then whatever money you still owe them becomes part of your bankruptcy.
Alternatively, you have the right when your bankruptcy starts to offer to surrender the assets to the secured creditor (ie cancel your contract). If you do this then the debts will be included as part of your bankruptcy.
I suggest you contact a trustee in your area to determine what the local practice is regarding cars and furniture – your trustee will be able to advise you on what makes the most sense for you and your family.