A secured debt is a loan that is secured by a collateral so that if you default on the loan, the lender can repossess the collateral. Car loan, mortgage and auto title loan are some examples of secured debt.
An unsecured debt can become a secured debt. For example, a credit card can sue you and obtain a judgment. The debt become secured when the creditor records an abstract of judgment at the recorder's office in the county of your real estate, creating a judicial lien on your real estate.
Obtaining a mere discharge without further actions whether from Chapter 7 or Chapter 13 Bankruptcy, does not get eliminate the secured debt. The secured debt will "ride through" bankruptcy.
Chapter 7 and 13 Bankruptcy affect secured debts differently by obtaining bankruptcy court approval. Chapter 13 Bankruptcy can reduce secured debt by filing a motion to value. For example, car loan may be reduced to the retail value of the car if certain conditions are met. Chapter 13 Bankruptcy can strip off a lien from your house (aka lienstrip) such as removing a second mortgage or home equity line of credit if certain conditions are met. However, as the housing value rises, the opportunity of this benefit diminishes.
Chapter 13 or 7 Bankruptcy can remove judicial liens recorded on your real estate (e.g., house) by filing a motion to avoid judicial lien if certain conditions are met. Chapter 7 Bankruptcy can redeem the secured debt.
There is a lot of benefits available in Chapter 7 or 13 Bankruptcy. Difference chapters of bankruptcy will offer different benefits and you need an experienced Sacramento Bankruptcy Attorney Muoi Chea to help you navigate the differences and pick the right option for you. Muoi Chea Bankruptcy Attorney provide debt relief throughout Sacramento, Stockton, Fairfield, California area and other nearby cities like Vacaville, Vallejo, Davis, Roseville, Lodi, Galt, Elk Grove, Roseville, Modesto, and Tracy, CA