Unsecured Vs. Secured Debt
Each year, millions of Americans seek debt relief by filing either Chapter 7 or Chapter 13 bankruptcy. With so many individuals needing help, it is not uncommon to see commercials, magazine advertisements or billboards offering help. Unfortunately, these forms of advertising cannot truly provide an accurate explanation and description of bankruptcy and the process of filing bankruptcy. With our website, we'd like to inform potential clients and clear up any concerns or confusion regarding different aspects of bankruptcy.
At The Rollins Law Firm, we understand the worry and concerns that surround financial problems. As you face this difficult time and seek debt relief, you want your questions answered in a clear, concise manner. One question we hear quite often is, What's the difference between secured and unsecured debt?Hattiesburg Bankruptcy Attorney · Jackson Bankruptcy Lawyer
Many ads will mention either secured or unsecured debt.
- Secured debt: This debt is protected in the sense that it is usually tied to either collateral or a court order. Collateral is an asset or piece of property that a borrower offers to a lender to secure a loan. Collateral is pledged as security for repayment of a loan, to be forfeited if you default on repayment of the loan. For example, a car loan is considered secured because a creditor can repossess the vehicle if you do not pay for it.
- Priority debt: Priority debt is a form of debt that will get paid before nonpriority claims. Examples of priority debt is taxes owed to the government, child and spousal support obligations. Additionally, domestic support and alimony, student loans and some taxes cannot be eliminated through filing for bankruptcy. Because priority debts cannot be discharged, you will still be responsible for any remaining balance due.
- Unsecured debt: Unsecured debt is debt that is not tied to specific collateral or court order. If you default on this debt, the lender must initiate a lawsuit to collect what is owed. Most unsecured debts such as medical bills, credit card bills, utilities and some personal loans can be discharged or eliminated by filing for bankruptcy. Student loans are an example of unsecured debt but typically this debt cannot be discharged in bankruptcy.
These are simply brief explanations. It is always wise to consult with a knowledgeable Mississippi bankruptcy lawyer to ensure that the answers are tailored to your unique situation. Even if some debt cannot be discharged through Chapter 7, we can explore the idea of rolling that debt into the payment plan of a Chapter 13. Let us carefully examine your finances and provide advice regarding your best course of action.
Call The Rollins Law Firm at 601-500-5533 or contact us online to learn more about our bankruptcy . We accept credit cards for payment of services. All prospective clients will meet with an attorney rather than a paralegal or legal assistant during the initial consultation. If the client cannot travel, we can do the interview over the telephone and mail any pertinent documents to the client.