Secured loan question.?

Question

What happens in a secured loan if the collateral is reposessed? Can you still not claim bankruptcy on the remaining balance?

Answer 1

You can enter the deficency balance into your bankruptcy claim; it will be up to the judge to decide if you should have to pay it out.

Answer 2

I'm not 100% clear on your question. When you obtain a secured loan the lender will have the collateral appraised and not lend you the full amount if your collateral is not valued at enough to cover the loan. You will need to put up additional collateral or larger down payment. That way if they reposses the collateral for non-payment it should cover all of the loan amount unless the collateral was damaged and did not retain its estimated value. Then you may be responsible for the balance. I'm not exactly sure how you can have collateral reposessed by anyone other than the lender if thats what your asking? No one will loan you money when your using a piece of collateral already encumbered by another lender.