If you are facing overwhelming debt in Wyoming, filing for bankruptcy can help you get your finances back in order and get your life back on track. Please continue reading as we explore whether secured debts can be discharged in bankruptcy and how our determined Gillette Bankruptcy Lawyers can assist you.
What Are Secured Debts?
Generally, loans and other types of financing available to consumers fall into two main categories: secured and unsecured debt. The primary difference between the two is the presence of collateral which provides a safeguard for the lender in the unfortunate event a borrower defaults. Unsecured debts don’t have collateral backing.
Secured debts are loans that are backed by tangible property like a vehicle or home. If you can’t repay the loan, the lender can seize the collateral to recoup the funds they advanced you. The most common types of secured debt for consumers are mortgages and auto loans.
It’s important to note that secured debts are given priority over unsecured debts during bankruptcy proceedings. This means bankruptcy proceeds can be used to pay off unsecured debts after the secured creditors have been paid off. The Chapter you file will determine how these debts are managed during the bankruptcy process.
What Happens to Secured Debts During Bankruptcy?
Once you have explored all debt relief options and determined that bankruptcy is the best course of action, it’s essential to understand the process of discharging your debts. If you file for Chapter 7 bankruptcy, your secured debt can be discharged. However, you will lose the property you purchased if you don’t pay for it after bankruptcy, as the lender has the right to repossess the property that secured the debt. For example, if you have a mortgage on your home and file under Chapter 7, the mortgage debt may be discharged by the lender can foreclose on your home to recover the balance of the loan.
If you file for Chapter 13 bankruptcy, you will have more flexibility when it comes to handling your secured collateral. This process involves reorganizing your debts, enabling you to pay them back over the span of three to five years through a court-approved plan. Depending on the unique circumstances of your case, you may be able to keep the asset and continue paying off the loan, plus any arrearages. If you keep the collateral, you may qualify to reduce the amount you owe. However, you can also surrender it to the lender.
Filing for bankruptcy in Wyoming can be a complex and challenging process. Given the various factors to consider, it’s highly recommended that you seek the guidance of an experienced lawyer from 307 Bankruptcy who can help you navigate the legal system and work towards a favorable outcome for your case. Connect with our firm today to learn more about what we can do for you during these difficult times.
