There are secured creditors that must be treated a certain way in a bankruptcy case. The transcription below touches the surface on what a secured creditor is and what types of decisions have to be made with regard to those secured creditors.
Jesse Barrientes: You said there were secured and unsecured creditors. So then unsecured creditor would be like the gas company or utility company or a credit card bill, right? And then what are secured creditors?
David Siegel: Well, a secured creditor is someone who is secured by property. And what I mean by that, if you don’t make a mortgage payment, you can be foreclosed upon. If you don’t make an auto payment, your vehicle can be repossessed.
Jesse Barrientes: But I can still do a Chapter 7 and get rid of that debt, too, is that correct?
David Siegel: With regard to secured property, you have to make a decision on whether you want to keep that property and continue to pay for it or surrender the property in full satisfaction of the debt. Most people, though, whether it’s houses and cars in a Chapter 7, they want to keep those items. They want to get rid of the credit cards and medical bills and the personal loans and the utility bills but they want to keep their house which they are up-to-date on usually and they want to keep their car which they need to get to work.
