Loans, Liens, and Leases. If this is your first bankruptcy (or even if it isn’t), these terms might be unfamiliar to you. Yet, they’re used all the time in bankruptcy negotiations, and when working with a Nebraska bankruptcy attorney. Let’s take a quick look at what these L-words can mean for you, if you’re considering bankruptcy.
Defining Loans, Liens and Leases
Before diving into what loans, liens and leases will mean for you, let’s go over a few definitions to make things easier:
- This is when someone gives you money with the promise that you’ll pay them back. This could be either private (say a family member or a friend) or a bank lender. A legal contract is signed, and you have a financial obligation to pay the loan.
- This is when the creditor loans you money to purchase something, but the lender has the right to take the property back if you don’t make the payments. A lien is a debt that’s chained to the property you buy. In other words, you own the property—a vehicle, a home, a boat, etc.—but when you sell it, you must pay off the lien before you receive anything on the sale.
- This is when you don’t actually own the property in your possession. You agree to pay for it while it’s in your possession, but you don’t own it. Though sometimes, you’ll be able to buy the property for a lump sum after the terms expire (think of a vehicle or furniture lease).
How Do They Impact Your Bankruptcy in Nebraska
So now that we’re squared away on what these L-words mean, let’s go back to discussing their inter play with bankruptcy.
A bankruptcy is going to help you manage these three L’s if you’re unable to make payments and you find yourself drowning in debt. It’s okay—don’t panic. We’ll get you through it! Here’s what a bankruptcy can do for you in these situations.
- If you have a loan with no security agreement or lien:
- Bankruptcy will wipe out your financial obligation to repay the loan.
- This means you can stop paying the debt, and move forward.
- If you have a lien on the property:
- The bankruptcy will wipe out your obligation to repay the loan, but the lien remains.
- The creditor can still repossess the property.
- If you give your property back to the creditor, the creditor can sell it but can’t come after you for the difference between the loan balance and what the property was sold for.
- If you’re in a lease:
- You’ll be able to surrender the property and get out of the lease.
- You’ll be able to move forward without having to make payments or pay penalties.
Contact Our Nebraska Bankruptcy Attorney Today!
Navigating debt and bankruptcy is never easy, but an experienced Nebraska bankruptcy attorney will be able to walk you through these complicated legal processes, and get your life back on track. If you have any questions about filing for bankruptcy in Nebraska, please give us a call at (308) 872–8327 or fill out our online contact form now.