Learn how to complete bankruptcy Schedule D: Creditors Who Have Claims Secured by Property where you must list your secured debts and creditors.
Schedule D: Creditors Who Have Claims Secured by Property (Official Form 106D) is where you list every debt secured by property, such as your mortgage, car loan, or a lien, and report how much you owe, what the property is worth, and any unsecured balance. You'll file it with the rest of your bankruptcy packet, along with your other schedules of assets, debts, income, and expenses. Once completed, your secured creditors will be properly accounted for.
Completing Schedule D (Official Form 106D)
To complete Schedule D, you'll list each secured creditor and provide details about the debt and the property securing it, including how much you owe, what the property is worth, and any unsecured balance. Here's what you'll need to provide:
Creditor information. The creditor's name and mailing address.
Ownership of debt. Who's responsible for the debt. If someone else has to pay the loan too—called a codebtor—check the appropriate box. This might be a cosigner, a guarantor, or a former spouse with whom you jointly incurred the debt.
Date of the debt. The date you took out the loan.
Description of the secured property. Use the same property description you used on Schedule A/B: Property.
Contingent, unliquidated, or disputed. Indicate whether the debt is contingent (it depends on an event that hasn't happened yet, like someone else defaulting on a loan you cosigned); unliquidated (the exact amount hasn't been determined, such as when you've been sued over a car accident); or disputed (you and the creditor disagree over whether you owe the debt, or how much).
Nature of the lien. Whether the debt is secured by an agreement (like a mortgage or car loan), is statutory (like a tax or mechanic's lien), or is a judgment lien. If it's another type, note it in the blank space provided.
Account number. The last four digits of the account number.
Amount of claim, value of the collateral, and unsecured portion. In Column A, state how much you owe on the debt, even if the property is worth less. In Column B, list what the property would sell for in today's market. In Column C, list any amount you owe that exceeds the property's value—the part a creditor couldn't recover by repossessing and selling it. If you and the creditor disagree on the property's value, the court can hold a hearing to decide it. (Fed. R. Bankr. P. 3012.)
What Is a Secured Debt?
A secured debt is a debt that's backed by property. If you don't pay as agreed, the creditor can take that property back. Miss a mortgage or car payment, for instance, and the lender has the right to reclaim your home or car. Bankruptcy law spells out how and to what extent a debt is treated as secured. (11 U.S.C. § 506.)
Unsecured creditors don't get that same right. If you skip a credit card or medical bill, the creditor can't take back the video game you bought or undo the medical treatment you received. It has to sue you and win a judgment before it can start collecting.
Some common secured debts include:
- mortgages or deeds of trust
- judgment liens against your property (recorded by creditors who've won a lawsuit against you)
- mechanic's or materialman's liens recorded against your property by contractors who claim they weren't paid
- tax liens, and
- security agreements, such as a car loan for which your car serves as collateral.
What Happens to the Unsecured Portion of a Secured Debt?
Bankruptcy law splits a secured debt into a secured part and an unsecured part—a process called bifurcation—whenever the debt exceeds what the property is worth. (11 U.S.C. § 506(a).)
In Chapter 7, your personal liability for that unsecured, "deficiency" portion is typically discharged right along with your other unsecured debts—the creditor can't sue you for it or come after your income or other property. What usually survives, though, is the creditor's lien on the collateral itself. Unless that lien is avoided, the creditor can still repossess or foreclose on the specific property if you stop paying, even though you're no longer personally on the hook for any shortfall.
You can avoid (remove) certain liens, but only in two situations: the lien is a judgment lien, or it's a nonpossessory, nonpurchase-money security interest in certain exempt personal property, such as household goods, furnishings, appliances, tools of the trade, or health aids. In either case, the lien can only be avoided to the extent it impairs an exemption you're entitled to claim in that property. (11 U.S.C. § 522(f).)
In Chapter 13, you might be able to reduce what you pay on some secured debts, but the rules differ by type of collateral:
- Car loans. If your vehicle loan is more than 910 days old as of your filing date, you can "cram down" the secured claim to the car's current value. The remaining balance becomes a general unsecured claim paid through your plan, often for pennies on the dollar. (11 U.S.C. § 1325(a)(9).)
- Junior mortgages. A junior mortgage (like a second or third mortgage) or HELOC on your home can be "stripped off" entirely and treated as a general unsecured claim if it's wholly unsecured. The first mortgage balance alone already equals or exceeds the home's value, leaving nothing for the junior lien to attach to. If there's any equity above the first mortgage, you can't use the cramdown rule to strip junior liens. (11 U.S.C. § 1322(b)(2).)
Protect Your Property
Filling out Schedule D correctly protects you: it puts your secured debts, and your rights to the property behind them, on the record from the start. Talk to a bankruptcy attorney before you file—it's the best way to learn your options and avoid problems down the road. Here are a few articles you might want to read next.