Bankruptcy is a federal proceeding by which you are granted partial or complete relief from the payment of your debts. The initial relief is an “automatic stay” which is in most cases is immediately issued upon the filing of the bankruptcy petition. The automatic stay will stop all lawsuits, repossessions, foreclosure proceedings, collection activities, and harassing phone calls.

The goal is to receive a discharge at the end of the proceeding and have a“fresh start.”In a Chapter 7 proceeding, you are relieved from your responsibility to pay debts, with a few exceptions, in exchange for having the debts eliminated. Your property that is not protected or “exempt” will most likely be liquidated by a Chapter 7 trustee.

A secured debt is simply a debt in which a creditor has a lien on some item of property to “secure” the payment of a loan pursuant to a contractor agreement. The most common types of secured debts are mortgages and car loans. The Chapter 7 discharge eliminates the creditor’s right to recover from you personally but not does eliminate the creditor’s right to take and sell the collateral if you fail to make your payments.

There are several options in bankruptcy that allow you to keep the property as long as you continue to make the monthly payments and comply with the terms of the contract. Your attorney will discuss the options with you and help determine the best solution for your situation.