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A secured debt is guaranteed by an asset such as property, vehicles, boats, or even cash. A mortgage, for example, is a loan which is secured by being attached to the property it was used to purchase. The lender has the right to foreclose on the property and sell it to get back the money owed if the debtor stops making payments. A car that is leased or bought with a loan can also be reclaimed by the lending agency.
If you have been keeping up the payments on your mortgage and car, the lender may be willing to allow you to keep them. After all, the lender’s profit comes from the interest you pay on your loan, not on reselling houses or vehicles. But some lenders do have an automatic policy regarding repossession, so it is important to discuss your secured loans with your bankruptcy trustee before you make an approach to the lender.
Even though the lender is willing to allow you to keep your property, the duty you owe to your creditors can mean that you will have to take built-up equity out of the asset in order to retain it. Each province and territory has different amounts that are exempt from being claimed by creditors during bankruptcy. In Ontario, for example, you can retain up to $5,650 value in your vehicle. Alberta exempts up to $40,000 in home equity, while Ontario has no real estate exemptions during bankruptcy.
If you have missed making payments, you will have a harder time retaining the assets, but an experienced trustee can often help you work something out.
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