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Secured Vs. Unsecured Debt


Filing for bankruptcy is never an easy decision, thus, it should never be made on a whim. Much is at stake for your present financial situation as well as for your future when the decision to file for bankruptcy is made. All of your debts will be under question if you file for bankruptcy. Determining whether you have secured debts, unsecured debts, or both will be an important factor on whether you choose to file Chapter 7 or Chapter 13 bankruptcy. Secured debts and unsecured debts are treated differently depending on how you file for bankruptcy.

Secured debts are debts that are associated with other pieces of property. For example, a car or a home is a secured debt that can be taken from you if you default on payments. These are secured debts that allow you to keep pieces of property only if you pay for them according to the conditions of the loan agreement that you signed. Secured debts deal with types of collateral that you can lose if you cannot, or do not, make the payments. Loan companies have the right to come after you and demand payment or to demand repossession for what you have not paid for.

Unsecured debts are not attached to any other property. Credit card debt, student loans, and medical bills are examples of unsecured debts. While lenders can demand payment and even bring a lawsuit against you, they cannot take back the services that you received. This means, that although you have not paid your student loans off, they cannot take away the degree that you earned, etc.

Both Chapter 7 and Chapter 13 bankruptcy deal with secured and unsecured loans, but they deal with these types of debt differently. Many people are intrigued by the quick process of Chapter 7 and that most unsecured debts will be discharged. Under Chapter 13, certain secured debts are often allowed to be put into a pay-off plan. Mortgage arrears and car payments are the most common types of secured debts that are put into Chapter 13. This often allows people to avoid foreclosure and repossession by catching up on payments under the protection of bankruptcy’s automatic stay.

If you are considering filing for bankruptcy, it is imperative that you speak with an experienced attorney who can review your complete financial situation. Both Chapter 7 and Chapter 13 have their advantages, but there are many factors to consider before choosing the right type of bankruptcy to file. Contact Boudreaux Law Firm today.

Posted on behalf of Boudreaux Law Firm

Boudreaux Law Firm

493 Furys Ferry Rd

Augusta GA 30907


The Augusta, Eastern Georgia law firm of Boudreaux Law Firm, serves Eastern GA and the CSRA, including the cities of Augusta, Evans, Martinez, Blythe, Hephzibah, Grovetown, Harlem, Waynesboro, Appling, Thomson, Louisville, Lincolnton, Aiken, North Augusta, and Peach Island, as well as Columbia County, Richmond County, Burke County, Jefferson County, McDuffie County, Lincoln County, Aiken County, and Edgefield County

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