Are Secured Loans Dischargeable In Bankruptcy ?
Secured loans often are given against some sort of security that you have to pledge before taking the loan. It could be against a fixed asset or deposit which guarantees the financial institution that you are going to pay back the loan. Also, when you sign an agreement for the secured loan, it often means that in case you default on the loan, the bank or the financial institution can hold back the asset until you repay the loan. |
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However, the financial institution has no right to liquidize the asset and the interest on the loan in the mean time keeps accruing.
In case you have filed for bankruptcy or you are on the verge of it, then your secured loan is outside the purview of the bankruptcy. This basically means that the secured loan has to be cleared no matter what. Or else, the bank can hold back your property.
Sometimes the secured loan also asks for a guarantor who acts as a security. In case you default on the payment, the guarantor is held responsible for paying it back. Bankruptcy filing has to be done through the respective court of the county or the State that you live in. Most of the loans including mortgage are often adjusted when you file for bankruptcy. However, in case of the mortgage your house or property for which you took the loan stands as a security. In such a case you lose rights over the property, it would lead to foreclosure.
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