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Can A Creditor Take My Furniture During Bankruptcy?

Posted By admin || 21-Oct-2009

Can A Creditor Take Back My Italian Leather Couch During Bankruptcy?

Bankruptcy and Your Furniture

When a debtor purchases a product with credit, the creditor has a secured interest in the property. What that means is that anything you buy with credit, including furniture, vehicles, jewelry, electronics, computers, clothes and books can be treated as a secured item during bankruptcy.  For example if you purchased a $3,000 laptop using your credit card, the credit card company could technically as for that particular item back, or ask you to reaffirm it in bankruptcy.  This basically rarely happens; but it is a risk with certain items such as high-priced electronics, furniture and especially jewelry.

Local merchants are more likely to go after household goods than a large national chain or credit card company. For example, if you purchased a couch at your small local furniture store on credit a year before filing bankruptcy, they might want the couch back or demand that you pay it off especially if it is high-end and has a high resale value. It's not likely to happen; but it is possible.

Here's what a debtor in bankruptcy can do about household goods purchased with credit:

  • They can return the items to the creditor during bankruptcy.
  • They can reaffirm the debt and agree to pay off the balance after bankruptcy. The balance is often negotiable.
  • They can payoff the creditor during bankruptcy so that they can keep the item.
  • They can choose to take no action and count on the high probability that the creditor will not attempt to get the property back.

Usually, the creditor (even a small one) will not attempt to get the property back unless it is very valuable and has a high resale value.  It's usually safe to take no action; but speak with your bankruptcy attorney first, specially if you have purchased high value items with credit such as computers and jewelry.

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