What options does a debtor have in regards to secured consumer debt?
If the debtor has consumer debts which are secured by property of the estate, then the debtor has several options, which typically must be exercised within 45 days after the bankruptcy filing, and which is reflected in a paper filed with the bankruptcy court called “statement of intention”. The first option is to surrender the collateral to the secured creditor, make no more payments, and wipe out the debt. The second option is to formally reaffirm the debt via a written reaffirmation agreement which is filed with the court. In this instance, the debtor keeps the collateral and keeps making payments in either the full amount of the debt or some agreed-upon reduced amount, but is liable to the secured creditor in the event of a default in payment. The third option is to redeem the collateral from the debt. In this case, he debtor pays the secured creditor the fair market value of the collateral. Finally, the debtor can avoid (cancel) the lien, with the debtor keeping the property and ma
