Secured vs. Unsecured Debt in Bankruptcy

For those swimming in a sea of overwhelming debt, filing a personal bankruptcy petition may be the optimum solution for getting your head above water. A Chapter 7 or Chapter 13 bankruptcy can end creditor and collection agency harassment, giving you the protection of the automatic stay by the court. In order to understand your debt relief options, however, it is important to be able to differentiate between secured and unsecured debt, as unsecured debt is commonly addressed in bankruptcy though foreclosure and repossession can be addressed with a Chapter 13 plan.

Secured debts are based on collateral, which is property you own such as your home or car. Your mortgage or vehicle loan is extended to you by the lender to purchase these items. Should you default on your loan terms, the lender’s investment is protected by foreclosure or repossession. Unsecured debts, however, are not tied to collateral. Should you default on these debts, the lender cannot resort to taking any property from you. The lender must go through the courts to get a money judgment against you, which can lead to wage garnishment or other actions. These types of debts include credit card balances, medical bills, utility bills, student loans, payday loans, memberships to health clubs, and similar financial agreements that are not based on property. How your debts are handled in any bankruptcy action will depend on what type of debts you have. The types of debt you wish to handle can also play a role in choosing the type of bankruptcy filing that will be best suited to your needs.

Personal Bankruptcy Lawyer in Chicago, Illinois

Deciding whether or not to declare bankruptcy can be a difficult process. Getting all of the information you need concerning how best to accomplish debt relief is important. Everyone is different, with different circumstances and needs. That is why it is important to consult with a legal professional who handles these matters on a daily basis for people just like yourself in your local area.

Attorney Joseph P. Doyle, serving people throughout the greater Chicago area, provides experienced and skilled legal representation for those in serious financial trouble. Mr. Doyle and his legal team have a vast knowledge of and experience with all of the many complexities involved in any type of bankruptcy case. They can help you create a viable and effective plan that will put you back in control of your financial situation. Learn the debt relief options that are available to you and begin the legal process with a trusted and proven bankruptcy professional. Contact the firm for a free bankruptcy evaluation.