Dealing with secured debts in Chapter 7
When a debt is secured, the creditor has rights in the security (or
collateral) in addition to the rights against the debtor.
The debtor's personal liability may be discharged in Chapter 7 while lien
rights in the collateral pass through bankruptcy unaffected unless
they are avoided or stripped down. When the lien cannot be avoided,
the debtor gets choices about how to
provide for the creditor's rights in the collateral.
Long term secured debt like mortgages pass through the bankruptcy
unaffected by the discharge. Most creditors secured in real property are
happy to continue receiving payments on the debt, so long as you are current.
See Chapter 13 for using that chapter
to cure defaults in long term secured debts.
