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bankruptcyFor most people in the United States, owning a vehicle is a necessity that allows them to get to work, go to school or even just go about their daily lives. Because of this, those who are struggling to make car payments or who are aiming to file for bankruptcy tend to be worried about whether or not they can keep their vehicle. For most people, keeping your vehicle after a Texas bankruptcy is entirely possible, though it depends on whether or not you are still making payments on your car and what type of bankruptcy you file.

Understanding Secured Debt

The first thing you should understand is that your car loan is a secured debt, which is unlike other types of debt such as credit card debt. A secured debt is one that is backed by physical property used as collateral, such as a vehicle. If you stop paying on your secured debt, your lender has the right to repossess your property.

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Summary

Do you have a second or third mortgage on your home? Imagine if you could stop paying that monthly mortgage payment. Imagine over the course of the next 3 to 5 years paying only as much as you could readily afford to pay on the balance of that mortgage. This is often only a small portion of the mortgage balance. Or, if over that time you could afford to pay nothing, you’d likely pay nothing on that mortgage balance. Then at the end of that time, whatever you couldn’t pay would get completely written off. That’s what happens in a second or third mortgage strip under Chapter 13 “adjustment of debts.”

Qualifying to Strip Your Second or Third Mortgage

The economic environment that is most likely to result in stripping mortgages is one of declining or static home prices. That’s not currently the situation in most parts of the country. Yet, given the huge potential advantages, it’s still worth looking to see if you qualify.

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Posted on in Bankruptcy Law

Bankruptcy is about debts. Different categories of debts are treated differently. The categories are secured, priority and general unsecured.


Your debts are the reason you are reading this. You want to know how bankruptcy would deal with your debts.

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Filing bankruptcy stops creditors’ collections against you immediately. But sometimes a creditor tries to get permission to collect anyway.

In our last 10 blog posts we’ve been talking about the “automatic stay.” It is one of the most important and immediate benefits of bankruptcy. The automatic stay stops most kinds of creditor attempts to collect their debts against you, your income, and your assets.

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The laws about the treatment of different types of creditors can often be used in your favor to pay who you want or need to pay.


Your Chapter 13 payment plan has to treat debts that are legally the same type of debts essentially the same way. But your plan can and must treat different types of debts quite differently. The laws related to this can be used to your advantage in many, many ways. Today we begin showing how this works with each of the three major types of debts.

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