A secured debt is any debt secured by an asset. The most common examples are mortgages (secured by a house) and car loans (secured by a car).
If you are so far behind on your payments that you are afraid the lender will repossess the asset secured by your loan, and you fear that bankruptcy may be the ultimate result, re-negotiating the debt may be an alternative to bankruptcy. Here’s how it works.
Instead of waiting for the bank to foreclose on your house, or repossess your car, you could re-negotiate the debt with the bank. For example, if you are three months behind on your mortgage, you could ask the bank to take the arrears and add them to the balance of the mortgage. The bank may want you to extend the term of the mortgage, or they may want to increase your interest rate. If you house has increased in value, the additional equity may make it possible for the bank to lend you the additional money.
Re-negotiating loans may not work in all cases, but for many it is a good bankruptcy alternative.
Posted by Editor Bankruptcy Alternatives @ 12:49 am