• Free Bankruptcy

    Evaluation

    Start on the road to financial freedom; contact us today for a free evaluation.

    Start Now
  • Read What Our

    Clients Are Saying

    Our results speak for themselves; see what our clients are saying.

    Read More
  • Seven Convenient

    Locations

    We have many locations to serve you, click here to find your nearest location.

    Contact Us
  • Meet Our

    Team

    Our team has 30+ years of experience. Get an experienced team on your side.

    Click Here

Cutler & Associates Ltd. Teaches You The Differences Between Secured and Unsecured Debt

In bankruptcy proceedings, a distinction is drawn between secured debt and unsecured debt, and they are dealt with very differently. Read on to learn more about how these types of debts are defined.
 
What are secured and unsecured debts?
Secured debt consists of loans tied to property, like home and car loans. If a debtor cannot meet these obligations, the lender has the option of repossessing the property to pay the debt. Unsecured debt, on the other hand, is not tied to property and consists of things like credit card debt, medical bills, student loans, and unpaid child support and alimony. If a debtor cannot pay his unsecured debts, lenders may send the accounts to a collections agency, which will attempt to persuade the debtor to pay these debts. Lenders may also sue debtors or garnish their wages.
 
How are these types of debt dealt with in Chapter 7 bankruptcy?
Chapter 7 bankruptcy deals with unsecured debt by liquidating a filer’s valuable property and using the proceeds to pay as much of these debts as possible. After bankruptcy proceedings are complete, these debts are discharged and the debtor is no longer responsible for them. Secured debts can also be discharged, but the debtor will lose the property they are tied to. Alternatively, a debtor can opt to reaffirm the debt and continue to pay it, allowing him to keep the property.
 
How are these debts dealt with in Chapter 13 bankruptcy?
Chapter 13 establishes a payment plan that allows bankruptcy filers to pay off a portion of his unsecured debts over a period of three to five years. After this point, any remaining unsecured debts will be discharged. As part of that same payment plan, filers become current with any payments they missed on secured debts, and they can hold on to those properties.
Cutler & Associates in Illinois is a law firm that has focused on bankruptcy since 1990. Call us today at (847) 849-1834 to get a FREE Bankruptcy Evaluation. 
Disclaimer:
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
Categories: Bankruptcy Blog

FREE Bankruptcy Evaluation

Fill out the form below and one of our experienced attorneys will get in touch with you immediately.