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Secured and Unsecured Debt in Bankruptcy

One of the first things that will need to be established when you file for bankruptcy is your secured debt and your unsecured debt. We will review the differences between the two below.

Secured and Unsecured Debt in Bankruptcy

Debts obviously play a role in your bankruptcy. And while it seems like all debt should fall under the title of “debt,” that is not the case when it comes to bankruptcy law. There are two forms debt can take: either secured or unsecured.

Unsecured Debt

A debt that is considered “unsecured” means that it does not have specific property that is serving as collateral for payment of the debt. The following are some examples:

  • credit card debt
  • utility bills
  • student loans
  • medical bills
  • personal loans that did not require that a security agreement or mortgage agreement be obtained
  • health club memberships
  • court judgments that have not yet been enforced by garnishment or attachment
  • income taxes
  • back owed rent (this is dependent on the state you live in).

If you are unable to make payment on unsecured debt, a creditor will not be allowed to take the property without first suing you and obtaining a court judgment.

Secured Debt

A debt that is considered “secured” has a piece of property attached to it that will serve as collateral for the debt. Examples include:

  • mortgages and home equity loans
  • auto loans
  • store charges that have a security agreement
  • personal loans from finance companies

If you fail to make payments on these secured debts, the creditor can take the property.

Working with a Bankruptcy Attorney

Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix business bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.

AZBK Lawyers

668 N. 44th St., Ste 320, Phoenix, AZ 85008

(602) 648-3274

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