Secured and Unsecured Debt

If you are suffering from financial difficulties, it is important that you learn the difference between secured and unsecured debt. The basic distinction between these two forms of money owed is that secured debts are backed by some sort of collateral. This means that if you happen to default on the loan, the creditor will have some sort of property to seize if and when the loan defaults.

Why should I know about secured and unsecured debt?

Knowing the difference between these two kinds of debt is significant for those who are considering filing for bankruptcy.

If you opt to go with Chapter 7 bankruptcy, then there is the potential for your secured debts to be returned to your creditors. Under this form of debt resolution, secured debts may be returned to creditors and non-exempt property may be liquidated under the new repayment plan.

If you choose Chapter 13 bankruptcy, however, then the debt repayment plan is merely reorganized with lower rates and a longer payback period. Secured debts do not pose an issue in this form of bankruptcy.

What are common unsecured and secured debts?

In order to help you better familiarize yourself with the different types of debts, it is suggested that you learn different, common forms of secured and unsecured debts. Typical secured debts include the following:

• Home mortgage
• Car loans
• RV loans
• Some home furnishing or electronics loans

Unsecured debts can include any of these forms of loans:

• Credit cards
• Personal loans
• Medical bills
• Some types of business loans

Make sure that you are familiar with these different types of secured and unsecured debt if you are considering filing for bankruptcy.

Contact Us

If you are considering bankruptcy and would like to learn more about secured and unsecured loans, please contact the Boca Raton bankruptcy attorneys of Eric N. Klein & Associates, P.C. today at 561-353-2800.