What happens to secured debts in a Chapter 7 Bankruptcy?

In Chapter 7 Bankruptcy Law in Michigan, secured debts are different from unsecured debts. Secured debts are debts that are backed by collateral. This means that if the debtor fails to make payments on the loan, the creditor can repossess the collateral. In a Chapter 7 Bankruptcy, the debtor has the option to surrender the collateral to the creditor or keep the collateral and reaffirm the debt. If the debtor chooses to surrender the collateral, the creditor will repossess it and the debt is discharged. If the debtor chooses to keep the collateral and reaffirm the debt, they must continue to make payments to the creditor, even though the debt is still discharged. The debtor will also have to continue to pay back the remainder of the debt, which is not discharged. This means that the amount the debtor is responsible for will be lower than the original amount of the loan. In some cases, the debtor may also be able to negotiate a lower interest rate or a reduction in the amount of the debt with the creditor. In the end, the secured debt will be discharged, but the debtor will be responsible for paying back a portion of the original debt.

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What happens to secured debts in a Chapter 7 Bankruptcy?

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