How Are Secured Creditors Dealt With In A Chapter 7 Bankruptcy?
Secured creditors are creditors with valid mortgages or liens against property of the debtor, most commonly a mortgage or car loan. The claim of a secured creditor is called a secured claim and secured claims must be collected from or enforced against secured property. Secured claims are not paid by the trustee. A secured creditor must prove the validity of its mortgage or lien and obtain a court order before repossessing or foreclosing on secured property. The debtor should not turn any property over to a secured creditor until a court order has been obtained. The debtor may be permitted to retain or redeem certain types of secured personal property (see Question 28, below).
