Unsecured versus Secured Debts
There are two categories of debt that may be evaluated in connection with a bankruptcy filing: secured and unsecured. These debts are distinguished by a creditor’s ability to legally seize or repossess some physical property if the debtor defaults on the debt. An unsecured debt is one that is not backed by any collateral and therefore, there is nothing the creditor can take to recover losses. Secured debts are those that are backed by collateral like an asset from the borrower. In the case of an auto loan, for example, the car itself is likely to serve as collateral and will be repossessed if payment is not made.
If you have found yourself in a tenuous financial position due to an overwhelming debt load, we can help you to determine whether filing for bankruptcy protection may offer some relief. For assistance understanding how secured and unsecured debts will affect your case, contact a Raleigh bankruptcy lawyer of the Bradford Law Offices, PLLC, at 919-758-8879 to schedule a free consultation.
Examples of Unsecured and Secured Debts
Because unsecured debts are not backed by collateral, they typically have higher interest rates. These loans are also riskier for the lender because there is nothing backing them. Some common examples of unsecured debts are:
- Credit cards
- Medical expenses
- Personal loans
- Student loans
If a debtor fails to pay back secured debts, creditors can take action and seize property. Some common examples of secured debts include the following:
- Car payments
Do not hesitate to seek legal counsel if you are unable to keep pace with your debts as a delay will only worsen the impact on your situation. To speak with a compassionate and committed lawyer about your options, contact a Raleigh bankruptcy attorney of the Bradford Law Offices, PLLC, by calling 919-758-8879 today.