Loans where you have pledged certain household goods (that you already owned at the time of the loan) as security may be avoided in bankruptcy. This means you can have the lien released, keep the goods and discharge the debt.

When times are hard, you may find yourself making a loan from a finance company. Often, finance companies require that you pledge various household goods, such as a television or lawnmower, as collateral. This is commonly called a “non-purchase money” loan secured by household goods. In filing bankruptcy, you usually will not lose those items to the finance company. In most instances, you may file a motion to void a lien against household goods. This allows you to keep the goods and discharge the debt. To do this, the household good must be a specific kind described in the Bankruptcy Code and must be exempt. Avoiding the lien is done by filing a motion with the Court and obtaining a Court Order that the lien be released. With the right facts, this can be done in both Chapter 13 and Chapter 7 bankruptcy.