From personal loans to secured loans, there are a huge variety of loans types available. Almost everyone has the unfortunate need of borrowing money, but sometimes, it isn’t always as simple as it seems. However, do you know what happens when you go bankrupt and you have various loans out? Are you still responsible for those debts or are you able to write the debt off? If you don’t know, then you must read on and find out for sure. Read her latest blog posted at http://www.hamiltondebtrelief.com/credit-cards-poor-credit/
What Happens When You Have A Secured Loan And You File For Bankruptcy?
As you probably are already aware, secured loans are very different from unsecured loans as they require collateral. When you hit financial trouble and there are secured loans out against your name, you may still be liable for the debts owed. Many can eliminate the debt but that does not mean to say the lender can’t recoup the money they’re potentially losing by taking ownership of the property you put up against the loan. In chapter 7 bankruptcy, lenders have the ability to seize assets, but with chapter 13 bankruptcy, property can be protected. Some lenders can offer a payment plan so that they still get their money and once the money is paid, you get the property back.
Bankruptcy and Unsecured Loans
If you have taken out unsecured personal loans and are filing for bankruptcy then your lenders cannot technically take your property. These loans are based on a promise, in which you are supposed to pay the debt but since you aren’t putting any collateral up, your property isn’t at risk. Lenders can take steps to recoup their money but as said, they have no legal right to your home or vehicle. It’s always a good idea to try and repay whatever debts you have so that they don’t make a greater impact on your credit but of course, if you are drowning in debt then it may not be simple. However, if you can, try to come to an arrangement with the creditors so you can still pay the debt but maybe in a smaller amount.
Facing Bankruptcy with Debts Looming Large
In truth, many unsecured loans can be written off when you file for chapter 7 bankruptcy. However, be warned, if your debts are great and you have sizable and very valuable property too then the court could make a judgment against you. You may have to sell or liquidate some property that you own so that part or the full debt can be paid. This can vary considerably depending on what you own and how much you owe to lenders. Personal loans can at times be written off fully, especially if you don’t have any assets to sell. You could still address lenders and ask to repay the debt with an altered payment plan so that it’s manageable for you but again, this is your choice. checkout their official website for more updates.
Be Sure Before You Act
Debt is debt at the end of the day and it’s your responsibility to pay such debt back. Unfortunately, if you get into financial trouble and there is just no way to repay the money, then bankruptcy is an option. However, bankruptcy should be the very last resort and even then, it may not write the entire debt off. Unsecured loans and secured loans can be written off during bankruptcy, but sometimes, they are not so it’s important to be sure on your position with a financial adviser before deciding if bankruptcy is right for you.