Question: I have to finally get out of debt because I'm getting calls from bill collectors and now I've gotten court papers because I'm being sued. I need to know if I can keep my car and my house. If I can keep the car and the home I will definitely file bankruptcy.
I accumulated a lot of debt over the past 5 years. I invested with a friend in a business and that has been tough because we're not making any money. Also, I went through a divorce and that was expensive because my wife got everything. Now I'm remarried and I have adopted my wife's four kids. Those kids are a big expense.
We live in Sandy Springs and I work in Alpharetta. I need to get a job with a company so that I can start paying some of expenses like my kids' private school, my daughter's alcohol and drug rehab and my new wife likes to buy clothes almost every week and she likes designer stuff.
I would appreciate it if you can let me know about keeping my car and my house.
B.P. in Sandy Springs, GA
Answer: Basically, if you want to keep your car and your house, you just need to make those payments. Those are considered "secured" debt. The difference between secured debt and "unsecured" debt is that secured debt is something that is collateralized, meaning that the collateral can be taken back by the creditor if the payments are not made. So if car payments are not made, the vehicle can be repossessed. If mortgage payments are not made, the property can be foreclosed.
While something like credit card debt is unsecured, meaning that there is no collateral to seize if payments are not made. Instead, the credit card company would have to bring a lawsuit to collect any monies owed.
Car finance companies and mortgage lenders are simply looking to get paid on their loans. So in most bankruptcy scenarios (but not all), if a person files for bankruptcy they can keep their car and house as long as those payments are being made.
Of course, some people file for bankruptcy to help protect their car from a repo or their home from foreclosure. In that situation, the bankruptcy law provides for possible relief so you don't lose your car or house.
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