How are secured creditors dealt with under chapter 13?

There are four methods of dealing with secured creditors under chapter 13:

1. The creditor may accept the debtor’s proposed plan,
2. The creditor may retain its lien and be paid the full amount of its secured claim under the plan,
3. Debtor may surrender the collateral to the creditor, or
4. The creditor may be paid or dealt with outside of the plan.

It is important to understand that a creditor has a secured claim only to the extent of the value of its security, which cannot exceed the value of the property securing the claim. Thus, a creditor with a mortgage on, say, a $1500 automobile, cannot have a secured claim for more than $1500 regardless of how much is owed to the creditor. If the debtor is in default to a secured creditor, the default must be cured (made current) within a reasonable time. Also, interest must be paid on secured claims.