Secured loans, or credit accounts secured with some sort of collateral (such as a car or home), are offered to all types of consumers. Common secured loans are auto loans and mortgages. However, personal loans can also be secured with bank accounts or other assets. Finally, private loans can be secured. "Writing off" a secured loan is quite challenging. In order to fully relieve yourself of any secured loan, you have two options: Chapter 7 bankruptcy or expunging the loan with the help of the statute of limitations.
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Things you need
- Secured credit account paperwork
- Income documents
Pull your credit report first. This will tell you exactly when you opened the secured accounts, how much they were opened for, the payment history on each and what is currently due. Visit the Annual Credit Report website for a free copy.
Review the statute of limitations for secured debts (the statute is different for different types of loans) for your state. See the link in Resources to help you find the correct regulation. Remember that debts can only be written off using the statue of limitation if you have not been paying the loan for the specified number of years.
Enrol in consumer credit counselling, if you have not done so already. In order to be granted a Chapter 7 bankruptcy, you must have gone through a credit counselling program and not succeeded. The court will dismiss your case if you do not have records to prove this.
Hire a bankruptcy attorney to help you with the Chapter 7 paperwork. It is possible to file bankruptcy without the help of an attorney, but the paperwork is often quite complicated. In addition, a lawyer can help you negotiate the most favourable result with the courts--namely, the elimination of all secured debts.
Complete the Chapter 7 paperwork with your attorney. Make sure you have documents relating to all secured accounts, including any mortgage agreements for your home and purchase and sale agreements for your car.
File the case with your local bankruptcy court. This must be filed in a federal court. It normally takes between one and four months to get a decision from the bankruptcy court. Be prepared to liquidate any assets to recoup the losses.
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