Secured debt question
We have two secured credit lines ($41K owing) and a loan (10 months left to pay) with my bank who also holds our mortgage. We have little equity in the house and we want to keep the house if at all possible. All payments are up to date and have never been missed. My question is, how are the secured debt payments handled in bankruptcy? Right now interest alone is $250 on the credit lines. Is interest stopped or reduced? A smaller payment made? I don`t understand how this part works.
I appreciate your help.
Posted from: New Brunswick
What a bankruptcy is designed to do is to deal with the unsecured debts, therefore the filing of a bankruptcy will not have any impact on the secured debt. Your payments to these secured creditors will have to continue as originally contracted. As such, there is no reduction in interest, no chage to the existing interest, if you want to keep the property that is pledged against these loans you must continue to make the payments.
The only way to alter this is if you return the pledged property prior to filing for bankruptcy, upon return of the property the secured creditors become unsecured as there is nothing left that they have a security interest on.