When a person files a chapter 7 bankruptcy case, they often have secured debts. These types of debts are secured to certain property, known as “collateral,” which can be taken to satisfy the debt if the debt is not repaid by the borrower.  Home mortgages and car loans are examples of secured debts as the lender retains a “lien” on the home or car (the collateral) and can foreclose on the home, or repossess the car, if the borrower defaults on their monthly payments on the debt. 

Before filing bankruptcy many debtors try other means of dealing with their debt. Occasionally debtors will take out additional debt in hopes of consolidating the debt. But for the creditors to provide additional credit to a potentially risky lender they may ask that the debtor obtain a co-signer on the debt. This co-signer will remain liable on the unsecured debt even after the debtor has received a discharge in the bankruptcy.

A very common question I get when I speak to potential clients is – can I keep one credit card out of my bankruptcy?  In short, no.  This is due to the fact that you have to list all your debts.  This includes unsecured debt, so all your credit cards, and unsecured loans, your tax debt, domestic support obligations, such as child support, and all secured debt, including your home and cars.