A Chapter 7 debtor, who was not in default under the obligations of a consumer loan agreement, was not limited to redemption, reaffirmation, or surrender of the collateral.

Here, the the court held that a Chapter 7 debtor could keep his vehicle pledged as collateral to the creditor, even though the debt was not reaffirmed, redeemed or surrendered to the creditor.

Instead, the debtor could retain the collateral and continue to pay under the original obligation until the full amount due was paid.

If the debt becomes delinquent, the creditor may take possession of the collateral (once no bankruptcy stay is in effect).  Matter of Windham (Bkrtcy.M.D.Fla., Judge Thomas E. Baynes, Jr.).

Author: By Charles R. Harroun, Attorney at Law