Secured Creditor Debts

Understanding Secured Creditor Debts in Canadian Bankruptcies

Dealing with Secured Creditor Debts can be a complex matter. However, understanding its intricate details can help you manage your financial commitments effectively. This article aims to explain the concept and how it operates, particularly when you’re faced with bankruptcy or filing a proposal.

Defining Secured Creditor Debts

A secured creditor is a lender to whom you’ve given an asset as a guarantee or security to obtain credit. This involves pledging an asset, such as a house or car, giving the creditor legal rights over it. If you fail to meet your payment obligations, the creditor is entitled to seize the asset to recover the debt.

Secured creditors retain their rights even if you file for bankruptcy or a proposal. Thus, if you wish to retain the asset used as collateral, you must continue to meet your payment obligations towards the secured creditor.

Secured Creditor’s Role in Bankruptcy or Proposal

Bankruptcy or proposal does not generally affect secured creditors. If you’re up-to-date with your payments, you can continue to retain your asset while also fulfilling your commitments to the secured creditor.

However, if you decide to stop making payments and return the asset to the secured creditor, the ensuing deficit can be included in a bankruptcy or proposal. For instance, if you had financed a car for $20,000 and it was eventually sold for $15,000, the $5,000 deficit can be included.

Also, it’s important to remember that you cannot later change your mind and decide to return the asset once you’ve agreed to keep it. This is particularly important as many lenders will require you to sign an “affirmation” agreement, reconfirming your commitment to the secured debt.

Exemptions in Secured Creditor Debts

The fact that an asset is “exempt” does not mean it is exempt from secured creditors. For example, in Saskatchewan, a vehicle required for your job or business is exempt. However, if the vehicle is financed, you would still have to pay the finance company. The exemption applies only against unsecured creditors and/or the Trustee in Bankruptcy.

Secured vs Unsecured Debt

Consumer debt is of two types: secured and unsecured.

Secured debt is provided by a secured creditor, as detailed above. The asset you purchase with a loan becomes collateral or security to the lender.

On the contrary, unsecured debt is without any collateral or security to back it. Credit card debt is a typical example of unsecured debt. Most times, unsecured debt attracts a higher interest rate than secured debt.

Understanding Your Financial Situation

If you have questions about secured creditor debts, it’s advisable to consult with a financial debt professional. They can provide a free, no-obligation consultation to help you understand your situation better and recommend the best course of action.

Consult a debt professional for guidance

Keeping Assets in Bankruptcy

To find more information on exactly what assets you can keep in bankruptcy, you can visit our website.

Know more about assets in bankruptcy

Exploring More Debt Help Information Resources

You can also explore more debt help information resources to gain a better understanding of the different types of debts and how to manage them.

Get more insights on debt management


Dealing with Secured Creditor Debts can certainly be daunting. However, being aware of your rights and obligations can help you navigate this complicated area with more confidence. Always remember, it’s advisable to seek professional advice when in doubt.

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