Two Basic Types of Debt in Bankruptcy

: Reese Baker & Associates

  Filed under: Debt

Most consumer debt can be considered either secured or unsecured debt. Secured debt usually has collateral attached to it. The most common types of secured debt are a home and mortgage and a car and car note. Unsecured debt is basically a promise to pay. These types of debt include credit cards, medical bills, payday loans, and personal loans.

When you start falling behind in your payments, secured debt usually gets paid before unsecured. If you fail to pay your mortgage, you could lose your home, or if you fail to pay your car note, your vehicle could be repossessed.


When you stop paying your unsecured debts, you will start getting phone calls and strongly worded letters. The next potential step is to sue you for the balance due. If an unsecured creditor is successful in suing you, they may obtain a judgment against you and attach a wage garnishment to or paycheck.

Chapter 13

If you are behind in your payments and you have a lot of secured debt, you may want to file Chapter 13 bankruptcy where you keep all of your assets and repay your debt over a three to five year period.

Chapter 7

If you have more unsecured debt like medical bills or credit card debt, you may want to file Chapter 7 bankruptcy and have your debt eliminated.

If you have overwhelming debt and would like to get financial relief, contact a McAllen bankruptcy attorney to find out what your best options are for the type of debt you have.