How to Deal with Secured Creditors in Florida
A security interest gives a creditor the right to repossess your property if you default on making payments. Secured creditors, creditors who have taken a security interest in your property, are treated differently from unsecured creditors by the Bankruptcy Court. For example, a secured creditor would be a creditor who has taken a security interest in your car and, in the event that you stop making payments on the car, the creditor has the right to repossess the vehicle.
In most bankruptcy proceedings, secured creditors are entitled to have the property returned, unless you continue to make payments on the debt. Below are a few ways you can deal with secured creditors:
1. Return the Property - Return the property (e.g., the car) to the creditor. Once you return the property to the creditor, you will not have to make anymore payments.
2. Redeem the Property - This option allows you to keep the property. You may keep the property if you pay the creditor the fair market value of the property, this is a one-time lump sum payment.
3. Reaffirm the Property - This option also allows you to keep the property. To reaffirm the property, you sign an agreement to continue to pay the debt. However, if you default on this reaffirmation in the future, the creditor can repossess the property and sue you for the balance owed. You should discuss reaffirming debts with a Florida Bankruptcy Attorney so you understand the full nature of the consequences involved. There are also certain debts that you should never reaffirm, a Florida Bankruptcy Attorney can inform you on these type of debts and explain why you would not want to reaffirm.
4. Avoid the Lien - You may be able to avoid the lien if the security interest is a non-purchase money security interest (the creditor did not give you the money to purchase the goods that the creditor has the security interest in).
It is beneficial to contact a Florida Bankruptcy Attorney when discussing the various options available to you concerning secured creditors. An attorney can advise you on the full consequences of each scenario and give guidance and suggestions as to which options will be the most appropriate for you in your bankruptcy case.
Greg Gilbert
Keith Maynard
