What happens to secured debts in a Chapter 7 Bankruptcy?

In a Chapter 7 Bankruptcy in California, secured debts are debts that are backed by collateral. These debts are paid off before other unsecured debts. The collateral for the secured debt can include a house, vehicle, or any other asset that the person filing for bankruptcy has that can be used as collateral. In a Chapter 7 Bankruptcy, the debtor has the option to surrender the collateral to the lender. This is the most common choice as it involves the least amount of hassle and the debtor will no longer have to make payments on the debt. Once the collateral has been surrendered, the debt is considered paid in full and no further payments are required. Alternatively, the debtor can keep the collateral and continue to make payments on the debt. This option is not as common but can be a good choice if the debtor can continue to make payments and the collateral is of significant value. As with all forms of bankruptcy, debts cannot be completely eliminated. While secured debts are paid off before unsecured debts, the debtor will still be responsible for paying off their secured debts in a Chapter 7 Bankruptcy.

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What happens to secured debts in a Chapter 7 Bankruptcy?

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