Before potential clients pick up the phone and call Halcomb Singler, LLP, to talk about the potential of bankruptcy they have typically explored and exhausted any potential debt solution possible. In this process it is not uncommon for me to meet with someone who has put up their home furnishings for collateral on a loan. Understandably, people are scared that if they can't pay the loan payment or file bankruptcy that a truck is going to pull up to their home one day and take all of their furniture away.
It is true that you can put up your home furnishings as collateral for a loan. I don't recommend this, but I don't recommend loans in general. I do understand that sometimes desperate times call for desperate measures and sometimes that means people take out a loan and put household furnishings up as collateral. When you sign an agreement where the lender takes your household furnishings as collateral it means that the lender can repossess your furniture if you default on the loan.
Bankruptcy debtors have "tools" that can be used in bankruptcy to put them in a much better position at the end of the bankruptcy than when they initially filed. One of these "tools" is the ability to remove liens as to household goods and furnishings. In short, this means that you can remove the lender's ability to take your furniture even though you did not pay back the loan.
For example, lets say that Bill and Heather have taken out a loan for $2,000.00 for which they agreed to put up their television and couch as collateral. Bill and Heather find themselves in a position 6 months later that forces them to file a Chapter 7 bankruptcy petition. Bankruptcy code section 522(f) allows the debtors to file a motion to avoid the fixing of a lien on an interest in their property to the extent that such lien impairs an exemption to which the debtor would have been entitled if such lien is for a nonpossessory, nonpurchase-money security interest in household furnishings. So, what the heck does that mean?
It means that if Bill and Heather already owned their television and couch outright at the time they took a personal loan and the couch and loan fit within the $18,700.00 in exemptions that Bill and Heather are currently allowed to claim in Indiana then they can file a motion to avoid the lien on their household furnishings and so long as it is granted by the Court their furniture is no longer collateral for the loan even though they didn't pay the loan and the debt is discharged in bankruptcy.
While this explanation is admittedly an oversimplification, the point is that there may be things that can be done in bankruptcy to help you get off to a fresh start that you have never considered. Don't assume that bankruptcy just erases debts. Bankruptcy is a very complex process in which one action can affect many other aspects of the filing of a bankruptcy petition. In addition, bankruptcy is a very powerful way for debtors to move forward financially and it is necessary to meet with a bankruptcy attorney to fully understand your options. If you are living in Hamilton County, Marion County, Boone County, Madison County, Hendricks County, Tipton County or Howard County and you would like to sit down for a free initial consultation to understand whether bankruptcy is a viable option to solve your debt problems call Halcomb Singler at 317-575-8222 or click here to fill out our contact form.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses
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