How do I know if a debt is secured, unsecured, priority, or administrative in order to fill out my schedules correctly?
A. Secured Debt: A secured debt is a debt that is supported by collateral, which is defined as property that secures the satisfaction of a debt. A creditor whose debt is secured by collateral has the right to use the collateral to satisfy the secured debt if the debtor defaults on his or her obligations. Most secured debts are created voluntarily when a debtor willingly pledges property to secure a debt. For example, most homes are burdened by a mortgage, which is a form of secured debt. If the debtor defaults on a mortgage, the secured creditor has the right to begin foreclosure proceedings against the real property that secures the underlying loan. Also, many people who buy cars pledge the vehicle to secure the loan, giving the lender a “security interest” in the car. Outside of bankruptcy, this form of secured debt may give the lender the right to “self-help repossession,” allowing the creditor to take the collateral without first seeking permission from a Court. Secured debts can a
