How may secured creditors be dealt with under Chapter 13?
There are four methods of dealing with a secured creditor under Chapter 13: (1) they may accept the proposed plan; (2) they may be allowed to retain their lein and be paid the full amount of their secured claim under the plan; (3) their collateral may be surrendered to them; or (4) they may be dealt with outside the plan. It is important to realize that a secured creditor is considered to have a secured claim only to the extent of the value of their secured interest, which cannot exceed the value of the property securing the claim. For example, if a secured creditor has a mortgage on an automobile, and if the automobile is worth $500, then that creditor has a secured claim for only $500, regardless of how much is owed to them. If the debtor is in default to a secured creditor, the default must be cured (made current) within a reasonable time. Also, interest must be paid on secured debts.
