Expert: Terry Leeders - 4/4/2009

Question
My grandmother took out a personal finance loan from CitiFinancial for about $6000...

Her income is limited consisting only of SSI disability and after about a year of payments other expenses may soon keep her from making payments on the loan.

She is considering bankruptcy as a solution as she rarely uses credit and needs to know what will happen to the mattress, chairs, and sofa she bought with the money.

She lives in Ohio and does not own a home and her car is not running and requires several parts and is unlikely to be worth repairing.

Under Chapter 7 which I believe would be for her there is the mention of liquidation of assets.

What would this mean for her?

Answer
If citifinancial is holding a security interest in the items, she can choose to reaffirm the debt for fair market value, and pay what the items are worth today in used condition on a payment plan.  She can also surrender the items too if she doesn't want them, discharging the debt completely.