What is the difference between secured and unsecured debt?
Secured debt is a creditor’s claim that is secured by a lien of some type on your property, either by your agreement or involuntarily such as with a court judgment or taxes. A creditor can generally claim the property that secures the debt in the event of bankruptcy. Unsecured debt is not tied to any type of property, leaving the creditor without any claim to property.
• What type or chapter of bankruptcy should I file? • Can I change from one chapter of bankruptcy to another? • Who can file bankruptcy? • How often can you file? • What do I need to begin the bankruptcy process? • Do you have to have a certain amount of debt to file? • What is a joint petition? • What happens if one spouse files for bankruptcy and not the other? • Does my divorce decree protect me from creditors if my ex files for bankruptcy? • The principal signor on a loan filed bankruptcy, now the creditor is coming after the co-signor. Is this right? • Can all types of debt be discharged? • What can I keep if I file bankruptcy? • Do I have to file bankruptcy on all the accounts I owe or can I keep some? • Will I lose my retirement accounts or payments from social security? • Will I lose my home if I file for bankruptcy? • How long does a bankruptcy stay on my credit report? • Can I do anything to remove a bankruptcy from my credit report? • When can I apply for credit again? • Can
Examples of secured debt: house loan, car loan, property taxes, or business loans that you pledged assets for. Also credit accounts for: furniture stores, jewelry stores, and electronics/appliance stores. A secured debt is “secured” by something you bought – for example, you bought a car and if you don’t make your monthly car payment, the lender can take back the car which is the “security” for the loan. The right to repossess merchandise for nonpayment is stated in your loan agreement. Once a lender has taken their property and resold it, you may still owe them the difference between what they got at the sale and what you still owed them on the loan. This portion of the loan is unsecured. Unsecured debts are not “secured.” The lender can’t take any of your assets from you if you stop making payments, they would first have to sue you and get a judgment against you in order to collect on their debt. Examples of unsecured debt: most credit cards, medical or utility bills, loans that requ
