How to turn a secured debt into an unsecured debt in Chapter 7 bankruptcy?

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How to turn a secured debt into an unsecured debt in Chapter 7 bankruptcy?

My husband was sued by a credit card company and was issued a writ of garnishment on his wages, although they have not yet been garnished. Today we filed emergency bankruptcy pro se, as it was the only option available to us. Other than the normally required bankruptcy forms, is there any other forms or motions I must file in order to turn this secured debt into an unsecured debt or is this done automatically? I have searched the internet and am unable to find an answer to this question.

Asked on August 9, 2011 Nevada

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Garnishment does not make a secured debt an unsecured debt. Garnishment is a mechanism for collecting on a debt or judgment, pursuant to a court order, when the debtor does not voluntary pay. A secured debt, on the other hand, is a debt secured by collateral--by some asset or property (a home, a car, stocks, etc.) which the creditor has a right to take (foreclose or repossess) in the event of non-payment. Garnishment, on the other hand, is not a security interest in an asset or property, but is court order allowing the creditor to divert part of the debtor's wages to the creditor's benefit. In short, if the debt was unsecured to begin with--as most credit card debt, apart from secured cards--is, then it would still be unsecured even with a garnishment order.


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