secured debt

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I recently had an email exchange with a fellow bankruptcy attorney who was a little confused about something called the § 1111(b) election in a Chapter 11 bankruptcy.  Her confusion was easy to understand because there are some interesting wrinkles in the statutory language that are worth exploring.

Before we get into the somewhat arcane aspects of today’s topic, it might be worth defining a few important terms that we’ll be using, and then summarizing the salient features of Chapter 11 bankruptcy.
Continue Reading The § 1111(b) Election In Chapter 11 Bankruptcy

This question comes up all the time – either explicitly, or implicitly – during my consultations with prospective and current clients.  Because there is no shortage of misinformation on the subject, it’s about time I wrote on it.

I.          Secured Debts

In typical consumer bankruptcy practice reaffirmation comes up almost exclusively within the Chapter 7 context, and generally in dealing with secured debt.  A secured debt is a debt that is secured by some tangible asset.  If the debtor (i.e., the borrower) fails to make the payments, the creditor (i.e., the lender) can repossess the security – i.e., the collateral.  For example, a car loan is secured by the car, and a home mortgage is secured by the home.

In order to better understand what is at work here, it helps to know a little more about secured debts.  A simple example will suffice to set the stage.  When a person takes out a loan to purchase a car, two important things happen. 
Continue Reading What Is Reaffirmation?