After a Chapter 7 discharge, does a creditor have the right to take back secured collateral if the debt is being paid?

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After a Chapter 7 discharge, does a creditor have the right to take back secured collateral if the debt is being paid?

My husband and I filed Chapter 7 in 10/10. We were discharged in 11/10. One creditor has a secured interest in a piece of electronic equipment. We did not receive a request to reaffirm (which we would have signed) and we have continuously made payments – never missed; never late. The creditor summarily turned our account over to collection, even though we have made payments. We are agreeable to paying the full amount owed. Does the creditor have the right to take back the equipment?

Asked on January 6, 2011 under Bankruptcy Law, Florida

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Listen you actually did the right thing: you continued to pay on the secured debt which in fact and in reality did reaffirm the debt.  If you continued to pay it on time then the creditor was not right in turning you over to a collection agency.  So what you need to do is to dispute the debt by requesting that the collection agency validate the debt.  That means that they are to give you a history of payments and your alleged default.  They are to provide you with a copy of the original contract you signed.  And last, they are to provide you with a copy of their agreement with the creditor that shows that they are permitted to collect on the debt (contract or assignment).  Once you have the info you can dispute it.  Hopefully you have all the receipts for payment.  Good luck.


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