Choices About Secured Property in Bankruptcy

Owing money on a secured debt presents a unique set of circumstances for the bankruptcy client. A secured debt can be anything, like a contract, a note, a mortgage or agreement securing property like your home, car, furniture or other piece of property or personal equipment.  Our clients make decisions regarding these types of loans or debts and the property securing them.  Property securing a debt is also known as collateral.  The options available in bankruptcy for Massachusetts and Rhode Island are Reaffirm, Redeem, Pay as Agreed or Surrender.


To reaffirm a debt, a Chapter 7 client must sign a reaffirmation agreement.  This is simply an agreement, like a contract, that declares the client wishes to retain the debt or allow the debt to continue, even after the bankruptcy case is closed. A reaffirmed debt is not discharged.  The court must approve a reaffirmation agreement and of course, the client must have a budget that shows they can afford to make the payment and keep the debt. There are many reasons why we may or may not counsel our clients not to reaffirm certain debts, especially in Massachusetts. Rhode Island is very different. Each different state has its own set of bankruptcy rules.


Redemption is a tool used for a client who wishes to pay a one lump-sum payment to the creditor to buy back property. Sometimes this tool is used to save vehicles, homes and personal use equipment and tools. This option is a useful tool when the property is valued much less than the balance still owed on the debt, (i.e., the loan is “underwater” or “upside down”).  Redemption must be approved by the court and is only permitted under certain circumstances.  One of those circumstances is that the property must be exempt or the trustee has abandoned the property due to it having little or no value. We advise our clients to be very careful when considering redeeming property.  In most cases, when a client has certain assets to buy back property, like a big chunk of money, then it’s critically important for the bankruptcy attorney to carefully evaluate whether or not the bankruptcy client actually qualifies to file bankruptcy.

Retain and Pay

This option is simple.  It is often used with mortgages.  This option allows someone to keep their home or auto loan and to pay for this debt as usual.  The important thing to note with this option is that once the retain and pay option is used, the client no longer is responsible to pay the loan if they decide, at a future date, that they no longer want to pay and want to give up or surrender the property.  In other words, using the retain and pay tool means that the client will no longer be held personally liable for the debt. This option doesn’t work in all situations and for all clients. We counsel our clients very carefully regarding making wise decisions and whether or not this tool should be used.


Surrendering Property is exactly as it seems.  Surrender means that the client has made a choice to give up the collateral securing the debt and give it back to the creditor.  This tool wipes the client’s hands clean of the debt.  Once the debt is discharged, the creditor can no longer collect on this debt and the client is no longer liable for the property.

How do I decide?

There are so many options to choose from in bankruptcy.  Knowing all the ins and outs of each choice is not only difficult, it’s daunting.  Different options are permissible or not, in different states.  Chapter choice, timing, multiple bankruptcies and property transfers are things to think about, just to name a few. Dealing with unraveling the information and the challenging legal analysis is always best left to the professionals. My clients prefer to get the counsel of a professional.  Based on our Google reviews, it is clear why our clients are satisfied and that they made a wise choice.

Attorney Ginger Kelly is now accepting clients in the Dudley, Webster, Sturbridge, Fiskdale, Southbridge, Saundersdale, Oxford, North Oxford, Charlton, Charlton Depot, Auburn, Leicester, Rochdale, Spencer, North Brookfield, Brookfield, East Brookfield, West Brookfield, Warren, Brimfield, Warre, Wales, Palmer and Holland Massachusetts.  We accept clients from Rhode Island on a case-by-case basis.  We can explore whether or not bankruptcy is the easy way out for you.  Our office is located in an easy-to-find place to find in Charlton, MA.  When you arrive, you will be greeted by Attorney Kelly and meet in a very confidential and comfortable place and we typically will have a lovely pot of coffee or a cup of tea waiting for you when you arrive.

By Ginger B. Kelly, Esq., December 17, 2019

ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like agriculture, conservation and sustainable homesteading. To find out more, Google us,  visit our website, find us on or call us at (508) 784-1444 and please, leave a detailed message, your contact information and telephone number.  Attorney Kelly will return your call as soon as possible.


NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

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December 11, 2019 · 2:26 am

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