Typically when you purchase a home, car or even jewelry, a lien will be created so that a creditor can repossess the property if you stop making payments or a mortgage lender can foreclose if you do not pay the loan. If you are considering bankruptcy, the bankruptcy code lets you discharge, or release, most debts including car and mortgage loans, furniture and jewelry loans, credit cards and medical bills regardless of a lien.
Now what happens if you decide to sell some of your assets to make money before filing bankruptcy? You may wonder if you can you sell assets with liens attached to them such as your vehicle. Generally speaking, it is not a good idea as you may still be on the hook for the debt after declaring bankruptcy.
If you knowingly sell an item that has a lien and do not pay off the lien holder with the proceeds, you may still owe the creditor. Even though you may use bankruptcy to reorganize or eliminate debt, your creditors still have rights, including the right to take property if you can’t or don’t pay. If you have sold or given away that property, you may still be responsible for the debt.
If you are considering bankruptcy, there are many issues to consider before filing to ensure the bankruptcy proceeds smoothly. Contact the Peoria Bankruptcy Law Offices of Charles E. Covey to get the information you need when considering Chapter 7 or 13 bankruptcy as a financial strategy for you and your family.