You may hear a creditor of yours is secured or has a security interest and wonder what this means. Creditors with security interests are those who have a lien on assets. This means, that if the secured amount of debt is not paid, the lender can take back the asset, so they can recoup the amount of debt that is owed.
Secured creditors are extremely common if you are using the debt to purchase something. For example, a mortgage, vehicle loan, or recreational item loan. Typically when we think of secured parties, we think of the bigger items in our lives, houses, vehicles, and recreation items. That being said, smaller items can have security interests on them too. For example, furnaces, televisions, appliances, etc.
To have a security interest, the creditor cannot just say so. They have to take steps to perfect their interest. Typically this is done by recording the mortgage, adding themselves as a lien holder to the title, or filing a UCC lien.
What happens if you stop paying on debts that are secured? The creditor will move to get the assets under the security interest back. This is commonly by repossession, foreclosure or replevin. When you have debts that are secured to collateral, you want to make sure to keep up with the debt payments to avoid losing the asset.
When you file bankruptcy your liability on the secured debt will be discharged through your case, but you need to keep paying on the loan to keep the asset.
CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
If you have questions about bankruptcy and would like to do a free consultation to go over your options, visit www.lifebacklaw.com to speak with an attorney. You will be glad you did!
