Understanding What Exactly Is a Secured Debt

: Reese Baker & Associates

  Filed under: Debt

secured debt, possessions, electronics, for sale, foreclosure, court, bankruptcy attorney houston, texas bankruptcy lawyers, attorney, lawyer, attorneys, lawyers, College Station, Bryan, Houston, Texas, TX, lawyers in houston, bankruptcy attorney,For many people the notion is that a debt is a debt and there is nothing to distinguish between one creditor and another, but this is an assumption that is incorrect. There are distinctly different types of debt and debtors.

There are some debts that are known as “secured” debts that differ completely from other debts. A secured debt implies that the debt is backed by collateral that will allow the creditor an opportunity to recoup their investment by re-possessing the item that has been used as that collateral. Examples of secured debt are mortgages and car loans. The debt is backed by these items. If you default on the debt the creditor takes back the car or forecloses on the house and re-sells the item to clear of the balance.

When you are forced to seek protection through bankruptcy the differences between secured and unsecured debt are very extreme and thus they are treated very differently by the courts. You have to be very sure to understand which debts are considered secured and which are not.

The best way of getting this straight is to contact a qualified bankruptcy attorney or trustee and get the advice that you need. Knowing the difference between secured and unsecured debts is extremely important to understand whether you are in a position of seeking bankruptcy protection or you are not. It is imperative that one knows the difference between the two and which kinds of debts you personally hold.