University Park Bankruptcy Attorney Tells How Secured Creditors Are ...

University Park bankruptcy attorney states that secured creditors are repaid pursuant to the terms of a Chapter 13 plan.  Mortgage arrearages are listed as a secured debt and they are paid back over the course of 3 to 5 years.  The amount of the arrearage has to be listed to the penny.  What this requires then is in every Chapter 13 bankruptcy case in the Northern District of Illinois involving mortgage arrearages, the debtor is going to list an amount that the creditor is going to file an objection to.  The debtors counsel is simply going to amend the plan to provide the proper amount of the arrearage and payback that arrearage over the life of the plan. 

Vehicle debt is also paid back through an adequate protection payment at a certain interest rate through the Chapter 13 plan.  Once again, the finance company has the ability to object to confirmation if it feels that it is being paid less than what it should be under the bankruptcy code and applicable case law.  Usually, the debtor’s attorney and the attorney for the finance company can work out an agreement prior to it having to go to a hearing before the court. 

Other secured creditors can be paid back either within or without the bankruptcy plan.  For example, sometimes there is a vehicle debt that somebody wants to pay outside of the bankruptcy case.  In certain circumstances, the court and the trustee will be okay with this.  In other circumstances, the court and the trustee wants the vehicle to be paid through the Chapter 13 plan.  Another issue with secured creditors is the debtor may decide to surrender the item in exchange for paying the unsecured portion of the debt.  So in many cases, debtors have a house that they want to surrender through a Chapter 13 or they have a vehicle that they want to surrender through a Chapter 13 and they do not wish to treat as a secured creditor.  Debtors have this option.  Debtor’s attorneys will file the proper schedules so that the court and the trustee and the creditor all understand what the debtor’s intentions are under the Bankruptcy Code.