Chapter 7 Bankruptcy severs the legal relationship between you and all of your creditors. However, it does not effect any security agreement such as the lien on your car or the mortgage on your house . Therefore, to keep those assets, the secured creditor must receive the proper amount of money at the proper time. You have 4 choices:

•  Redeem

•  Reaffirm

•  Surrender

•  Retain, pay timely, but not Reaffirm

Redemption means that you pay the secured creditor the Fair Market Value of the asset in one single payment. Upon payment, the asset is yours free and clear. Any balance of the debt is treated as unsecured.

Reaffirm is when you sign an agreement to waive the discharge and essentially re-establish the original agreement. This is as if you have never filed a bankruptcy as to this debt. Therefore, if you cannot pay the debt later on, the creditor can sue you and pursue you legally.

Surrendering is when you give up the property to the secured creditor. They can liquidate the asset or whatever they deem appropriate. However, you are not legally responsible for any portion of the debt.

Retain, pay timely, but not Reaffirm pursuant to 2 nd Circuit Case Law, you are allowed to continue making timely payments on secured assets without signing a reaffirmation agreement and to keep those assets. However, should you fall behind, even in the slightest, you can expect the secured creditor to repossess or foreclosed.