What happens to secured property in a chapter 7 case?
A debtor must file a statement of his intention to either retain or surrender the property within 30 days of the date of filing. Should the debtor choose to retain the property than he must either (1) reaffirm the debt with the creditor; (2) redeem the property by paying the creditor the wholesale value of the collateral (only available with tangible personal property); or (3) keep the contractual payments current. Because it is not usually in the debtor’s best interest to reaffirm a debt and because a creditor is not obligated to reaffirm, it is preferable for a debtor to have payments current on secured debts when filing for bankruptcy.
