Difference Between Secured and Unsecured Debt
Secured debts and unsecured debts differ because a secured debt is attached to an asset like a car or a home, while unsecured debt is not associated with a physical debt. Examples of unsecured debt include credit card bills and medical bills. If a debtor does not pay a secured debt, the lender can repossess the property that is associated with the loan. Depending on the type of debt that a person acquires, can affect the type of bankruptcy they choose.
A Chapter 7 bankruptcy allows debtors to discharge unsecured debts. To keep assets that are tied to secured debts like cars, the debtor will likely be asked to reaffirm the debt and continue making payments. Debtors cannot discharge secured debts and still keep the property that is the subject of the loan.
A Chapter 13 bankruptcy may be a better option for debtors who have a lot of secured debt. A Chapter 13 bankruptcy allows debtors to keep more property, but they must make payments according to the Chapter 13 plan for several years. Creditors are paid in order of their priority which is determined by law. After the debtor pays money according to the plan for a set number of years their remaining debt will be discharged. Some people file a Chapter 13 bankruptcy because their income does not allow them to qualify to file a Chapter 7 bankruptcy.
A Brooklyn bankruptcy attorney can determine what your options are and help debtors choose which type of bankruptcy is right for them. A Brooklyn bankruptcy lawyer will consider what types of debt you have as well as what property you own and your income when advising you about your bankruptcy options. Debtors with a business may want to file a different type of bankruptcy than those who primarily have consumer debt. Debtors who are married can file bankruptcy along with their spouse or individually. Call Ursulova Law Offices to schedule an appointment with one of our Brooklyn bankruptcy lawyers today.