Q: Will secured personal loans with a third party debt collector still be discharged?
I’m filing for chapter 7 bankruptcy and have a few personal loans with collateral that were sold to a third party debt collector. I researched that only unsecured debts would be able to be discharged. But someone told me even though the secured loans were sold to a third party debt collector they would still be discharged. Is that true or not?
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- (916) 704-3009
- View Profile
- Answered
A:
When you file for Chapter 7 bankruptcy, the discharge generally applies to unsecured debts. Secured debts, which are loans backed by collateral, typically aren't discharged because the lender has a claim on the collateral. If the secured loan has been sold to a third-party debt collector, the nature of the debt doesn't change – it remains secured.
However, it's important to know that even if the debt is with a third-party collector, they still have a right to the collateral. This means that while the personal liability for the debt may be discharged, the creditor can still repossess the collateral if the debt is not paid.
It's crucial to review the specifics of your loans and the status of your collateral. Consulting with a bankruptcy attorney could provide clarity and guidance on how these rules apply to your situation. This way, you can better understand your options and protect your assets during the bankruptcy process.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
