When filing for bankruptcy many debtors have debt associated with upgrades to their home such as a water heater or in ground swimming pool. Just like all other debts, these debts must be included in the bankruptcy filing. But that doesn't mean that handling of the debt on these housing fixtures will be simple as other secured items such as a vehicle.
Usually what happens is that the lender has a security interest in the fixture that has been attached to the house. What that means is that the lender will continue to own the fixture until the loan has been paid. For example, if you financed a swimming pool, the lender will still legally own the swimming pool until you pay the loan balance. If you fail to pay the loan, then the lender will have the right to take the fixture. That's something they don't want to do, because most of the fixtures have no resale value.
What usually happens during bankruptcy is that the debtor reaffirms the debt on the housing fixture. But they only reaffirm the debt if they are keeping the house and only if they can afford to do so. Reaffirmation means that the debtor agrees to repay the loan after bankruptcy. The debtor can only reaffirm a debt with the approval of the bankruptcy trustee. To find out more about reaffirmation in bankruptcy contact a Dallas-Fort Worth bankruptcy attorney .