When you file bankruptcy, with the court’s help, you can legally eliminate all of your qualifying debt. Some debt can never be discharged, such as alimony, child support, or current taxes. And some like secured debt will not be eliminated if you plan to keep the collateral.
The court can rule that you no longer have to make your credit card payments, but they cannot rule that you no longer have to make your house or car payments. Not unless you turn in that collateral and no longer wish to keep those assets.
If you want to keep your secured collateral, you will have to make arrangements with the court on how you will pay the arrears. You will have three to five years to make these back payments. You will also need to continue to make these payments if you wish to use the collateral in the future.
Value of the Property
Another option for your secured debt during bankruptcy is to pay the value of the asset at the time of the filing and not the original amount due. For example, if your car loan is for $5,000 and the current value of the vehicle is $2,000, you can pay the two grand, and the rest of the debt will be eliminated in bankruptcy.
Other types of secured debt that cannot be eliminated are student loans, fines, and fees owed to government agencies and some taxes. Speaking to an experienced Plano bankruptcy attorney can help you determine the best type of bankruptcy to file for your unique situation.