It is so disheartening when individuals have struggled for many years to meet their financial obligations and then circumstances put them in a tight financial situation. This can be a result of huge medical bills, or someone losing their source of income. They may have no other option but to claim a Lousiville bankruptcy and they are really worried about all the equity that has been built up in their secured debts.

Profit Becomes The Estate

Equity means that the property in question would sell for more than you owe on it. For example, if you sold your home for $300,000. But you only owe $200,000 to the mortgage holder then you have $100,000. worth of equity. Your equity becomes part of your bankruptcy estate. The trustee could see fit to have you sell the house. The proceeds would then pay off the person holding the mortgage. Then out of the amount remaining you would get your exemption amount. The balance would then go towards paying some amount to the unsecured creditors.

In many cases there has not been any equity built up and you actually owe more to the creditor than what the value of the property. The reason for this being is that likely the majority of your payments have been towards interest, while at the same time the property depreciated, which is often the case with a vehicle rather than real estate.

Depending on what exemptions are in place the trustee will probably not have any interest in the secured property. It will be up to the creditor whether he is going to force sale of the secured property or allow you to continue making payments.