What happens to secured debts e.g. My Car Loan or House?
Car loans, mortgages, and furniture credit cards are loans which are taken in order to purchase an asset. That asset is given as security for the loan, so that if payments are not made, the lender can retrieve the asset for which you borrowed the money in the first place.
In general, creditors are more interested in receiving payments than in dealing with the used asset. If your payments are up to date, and you keep them current, it is unlikely (though not guaranteed, depending on the situation) that the creditor would take your house, your car, or your furniture.
If, on the other hand, you can no longer afford the payments on the car, furniture or house loan, you may be able to include those debts in a bankruptcy or a proposal, in exchange for returning the asset you borrowed the money to buy. Before taking this step, speak to a Trustee in Bankruptcy to make sure the decision to keep or return the asset is the right one for you.
For more information on your Secured Debts Contact Us or Industry Canada