Secured debts are those debts that are held by a secured creditor who has loaned you money to purchase an asset that can be used as collateral to obtain the credit.
Examples of secured creditors include your mortgage lender (your home is used to secure the loan against non-payment) and your vehicle loan.
By accepting the loan for your car or home, the vehicle and your home secure the loan by becoming collateral against the loan.
If you, as the borrower, were to default on the secured loan agreement, your secured creditors have a legal right to seize the asset used for collateral.
The asset can then be sold by your creditor to use the money to meet your remaining debt obligations.
Filing bankruptcy or making a consumer proposal, does not remove your secured creditors right to your home or vehicle.
If you file a consumer proposal or personal bankruptcy, and wish to keep your home or car, you must continue to make the payments on your mortgage and car loan.
You will be able to continue the payments only if your payments are up to date and current at the time of your proposal or bankruptcy.
If you have secured debts you should meet with a Licensed debt professional for a no-obligation, free consultation if you are considering an insolvency process – filing bankruptcy or a consumer proposal.