What happens to secured debts in a Chapter 7 Bankruptcy?

In Virginia, Chapter 7 Bankruptcy Law is a court-supervised process that allows individuals to discharge most of their debts. In this type of bankruptcy, the debtor (the person filing for bankruptcy) is allowed to keep some of their assets, but these assets must be used to pay secured creditors. Secured debts are those that are backed by an asset such as a car, a home, or jewelry. In a Chapter 7 Bankruptcy, the debtor must decide whether to surrender or keep these assets. If the debtor chooses to keep the assets, they must continue to make payments to their secured creditors. This means that the creditors will still have a claim on the asset and can repossess or foreclose on it if payments are not made on the debt. If the debtor chooses to surrender the asset, the debt still must be paid by the debtor. The difference is that the debtor will no longer have the asset to pay the debt and must find another way to repay the debt in full. This means that the debtor must find other assets to pay the debt, such as a lump sum of cash or other assets they have not already given up in the bankruptcy. In both cases, the assets secured by the debt must be given up in order to be discharged in a Chapter 7 Bankruptcy. This means that debtors must decide if they can make payments on the debt or if they need to surrender the asset in order to be free of the debt.

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What happens to secured debts in a Chapter 7 Bankruptcy?

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