What are Secured and Unsecured Debts? Personal bankruptcy can help you regain control of your debts and grant you a financial fresh start. Depending on the type of bankruptcy for which you file, your debts may be discharged, or eliminated, or you may be given the opportunity to repay them over a three to five year period. Our Los Angeles bankruptcy lawyer can help you determine how best to protect your assets through bankruptcy exemptions.
Secured debts are the first type of debt. These debts are linked to collateral, or property, you own. Mortgages, vehicle loans, some types of personal loans, and charges that are secured by an agreement may all be considered secured debts. Liens and judgments may also be considered secured debts. If you default on a secured debt, the creditor may be entitled to repossess the property. The property may then be liquidated to pay the debt. Unsecured debts are the second kind of debt. These are debts that are not backed by collateral. These include credit cards, medical bills, utility bills, student loans, child support, and similar debts. If you default on an unsecured debt, the creditor must first hire a debt collector in an attempt to collect payment. If the creditor is unable to collect payment, he or she may seek wage garnishment or a lien through the courts. When you file for either chapter 7 or chapter 13 bankruptcy, creditor actions will be at least temporarily halted through an Automatic Stay. However, the two bankruptcy petitions handle the types of debts differently. Chapter 7 bankruptcy will discharge most unsecured debts other than student loans and child support. A chapter 13 petition can help you retain your secured property by allowing you to restructure your debts into a more manageable payment plan. Once you have successfully completed your payment plan, remaining unsecured debts may be eligible to be discharged. Contact our bankruptcy attorney in California today to learn more about your options for personal or business bankruptcy or to schedule your consultation. To learn more about the bankruptcy process, visit USCourts.gov Back to Blog |
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Samuel- Woodland Hills, CA
My wages were being garnished, and I was getting sued by creditors. I could not pay my debts to credit card companies. Hamid Soleimanian filed a chapter 7 bankruptcy for me and stopped my wages from b...