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Secured Claims For example, when you buy a car and finance it, you allow the lender to hold title to your vehicle until the loan is paid in full. Some loans are secured involuntarily, generally by operation of law.
Understanding Secured Claims If you don't pay a secured debt, the creditor can take the collateral and sell it to obtain payment. If you file a Chapter 13 and intend to keep the property securing the loan, you must stay current on the payments while paying off any arrearages over the repayment plan period.
A secured claim is a financial obligation for which there is collateral to guarantee the payment of a debt. The collateral can be most any type of property, such as real estate, business inventory and personal goods. With most secured claims, the debtor voluntarily pledges an interest in property to the creditor.
Unlike unsecured debt, secured debt (e.g. mortgages and car loans) must be made current under Chapter 13 plans, if foreclosure of the house or repossession of the collateral is to be avoided.
In Chapter 13, you repay secured debts through the repayment plan. In both cases, you can surrender the collateral, which means the debt is no longer secured.