Secured vs. Unsecured Debt | Trammell Law Firm – Bankruptcy Attorney in Nashville
Not all of us have the finances necessary to pay for college, homes, and life’s many luxuries—that’s why we have a system of secured and unsecured loans that allow us to fund our endeavors, provided that we eventually pay them back. Unfortunately, these loans can turn sour if you’re not careful, leaving you with no choice but to file for bankruptcy. Here’s a brief overview of secured debts and unsecured debts and how they factor into bankruptcy.
- Secured debt
Secured debt refers to all loans that are attached to some sort of collateral. For example, a mortgage loan for a house is considered a kind of secured debt, because the lender can take possession of the home if the debtor defaults on his payments. This arrangement provides less risk for lenders.
- Unsecured debt
Unlike secured debts, unsecured debts do not come with any form of collateral attached. All credit card debt is unsecured, as are medical bills and certain unsecured loans. The abuse of credit cards and other unsecured loans often cause debtors to file for bankruptcy, since there’s essentially no limit to how much debt you can accrue.
- Bankruptcy
If you’re stuck with a tremendous amount of secured or unsecured debt, bankruptcy can help. Chapter 7 is especially helpful for getting rid most unsecured debts, though you will have to forfeit some of your personal property in exchange. Chapter 13 bankruptcy, on the other hand, is great for getting rid of unsecured debt and making up for missed payments on secured debts. It does, however, require the filer to devise a three to five year repayment plan.
If you need help dealing with your secured or unsecured debt, contact Trammell Law Firm in Nashville. Attorney Adrienne Trammell has years of experience helping people through bankruptcy. Call (615) 338-7500 for more information.
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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.
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