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Secured debt is bit more complicated through bankruptcy than unsecured debt. After filing for bankruptcy, unsecured debt is either discharged immediately (Chapter 7) or following the successful completion of a repayment plan (Chapter 13). Secured debt, however, is not as simple. It is important to contact a skilled bankruptcy lawyer to learn more about your options.
At Ledford & Wu, our Illinois bankruptcy attorneys have extensive experience helping clients through the process of filing for bankruptcy. One of a client's first concerns is whether or not he or she will lose a house after filing. This type of loan is considered secured debt, as there is collateral attached to the debt.
Typically, a mortgage loan is handled differently in Chapter 7 and Chapter 13:
- Chapter 7: In a Chapter 7 bankruptcy, the options involving your mortgage are limited. If you elect to surrender (walk away from) the home, then your liability on the debt can be discharged. If you want to keep your home, you must maintain your payments. If there is enough equity built up in the home, we can work to execute a reaffirmation agreement with the lender.
- Chapter 13: In a Chapter 13 bankruptcy, our goal is to cure any mortgage arrears (to catch you up on any past due payments). Depending on the equity calculation, we can work to strip off a second mortgage or junior lien. Additionally, we might be able to cram down investment properties to present fair market value.
With these options, there are all sorts of caveats. It is wise to schedule a consultation with an experienced bankruptcy attorney to learn more about how bankruptcy can help you.
Contact Any of Our Chicago Area Offices
Learn more about how to handle mortgage loans. Call 888-542-1900 or contact our offices by e-mail to discuss your options during a free consultation with an attorney.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
