Those assets against which the creditor has collateral (mortgage, car loan) are known as secured assets. When you file for bankruptcy, bankruptcy filers have 3 options with respect to secured debts say lawyers of Los Angeles based bankruptcy law firm Recovery Law Group. You can either surrender the asset. When you opt for this choice, you give your interest in the asset back to the creditor.
You can reaffirm the debt in which case you and your creditor draw a new contract with similar terms, and you get to keep your asset/property. In this case, you can keep your car or home even during bankruptcy. However, there is absolutely no guarantee that the creditor might agree to your debt reaffirmation offer. This is especially the case if you are behind on your payments. Bankruptcy attorneys generally suggest debtors to have their payments up-to-date, especially on secured debts if they wish to opt for debt reaffirmation.
The last option available for debtors with respect to secured debts is redemption. In this case, the debtor can purchase the asset for its fair market value which might be lower than what you owe to the creditor. This can be one of the best options, especially in case of an underwater mortgage or car loan (depreciated value); however, for a person who is filing for bankruptcy, to come up with this amount is often difficult. Hence, it is often the least taken option. There are some financing companies that offer to pay the redemption amount in lieu of a secured note, but this will result in you starting your bankruptcy with fresh debt.
If you are worried about your impending bankruptcy and your secured assets, you should consult with experienced bankruptcy lawyers by calling 888-297-6023.