With secured debt it means that you have given the creditor something that they can take if you do not pay your debt. With your house or if you have property then that in itself becomes the collateral. So if you defaulted on the payments they would have the right after following the proper legal recourses to take that property from you. If this occurs then they must sell the property, take out of the proceeds what is owed to them and then give you the remained. Debts that are holding collateral are classed as secured debts under the bankruptcy act.
The Secured Debt Difference
You are also personally liable for your secured debt. If the secured debt is dischargeable under your bankruptcy relief then your personal liability towards it is also discharged. The bankruptcy laws can be really complex especially when it comes to the creditors. For this reason it is most important to use the services of a Houston bankruptcy attorney. The security a creditor has on your property represents his legal claim to the property, and can be used if you don’t pay the debt. A bankruptcy will not stop the creditor from doing this, but it does buy you time to figure out a debt relief plan that works for your budget. In some cases you can ask the courts to also remove the lien.
Often people ask what is the point of going bankrupt if secured debts are not totally wiped out? Most often there are a lot of unsecured debts being dealt with as well. If these get discharged it makes it financially easier to handle the secured debt.