{"id":2864,"date":"2010-08-04T09:00:37","date_gmt":"2010-08-04T09:00:37","guid":{"rendered":"http:\/\/www.duncanlawonline.com\/?p=2864"},"modified":"2026-06-07T00:49:48","modified_gmt":"2026-06-07T04:49:48","slug":"difference-secured-debt-unsecured-debt","status":"publish","type":"post","link":"https:\/\/www.duncanlawonline.com\/staging\/8350\/difference-secured-debt-unsecured-debt\/","title":{"rendered":"What is the Difference Between Secured Debt and Unsecured Debt?"},"content":{"rendered":"

A secured debt<\/strong> is what\u2019s commonly known as \u201ccollateral debt\u201d.\u00a0\u00a0 In other words, the creditor can come and take property that is tangible and use that property as payment if you default on any payments.\u00a0 The most common examples of this would be either a house or car.\u00a0 If you were to fall behind on these payments then the creditor could come and repossess or foreclose on the property and take it from you. Since secured debts are attached to property (vehicles, houses, furniture, electronics, etc.) you are making payments on, you can either choose to continue making payments or surrender the property within the bankruptcy. If you surrender the property through the bankruptcy filing, it removes your name from any legal obligation to pay the debt owed on the property and once the bankruptcy is filed no one will be able to come after you for the remaining debt. If you want to keep the property you will make the monthly payments until it is paid off.<\/p>\n

An unsecured debt<\/strong> is a debt that is not combined with any piece of physical personal property or real estate.\u00a0 When a person has unsecured debt, the creditors do not obtain any collateral, therefore making it harder for them to receive their payments.\u00a0\u00a0 They are only going by your promise to pay them back in the future. Since\u00a0an unsecured debt lacks an attachment to physical property (credit cards, medical bills, some personal loans, etc.) these debts can typically be wiped out at the completion of a bankruptcy. Granted, while the majority of unsecured debt can be wiped out through a bankruptcy, there are some unsecured debts that cannot be wiped out<\/a> such as\u00a0taxes, student loans, and domestic support obligations.<\/p>\n

Knowing the difference between secured debts and unsecured debts can be extremely useful in determining which type of bankruptcy will work best for you.\u00a0\u00a0 In order to file a Chapter 7 bankruptcy<\/a>, you must be current on all house and car payments in order to keep them.\u00a0 A Chapter 7 bankruptcy will wipe out any unsecured debt.\u00a0 A Chapter 13 bankruptcy<\/a>, on the other hand, is what\u2019s known as a repayment plan.\u00a0 If a person does not qualify under the Means Test<\/a> or is behind on their house or car payments then a Chapter 13 will help the person keep their property while making monthly payments to the Trustee.<\/p>\n","protected":false},"excerpt":{"rendered":"

Knowing the difference between these two debts can be extremely useful in determining which type of bankruptcy will work best for you. In order to file a Chapter 7 bankruptcy, you must be current on all house and car payments in order to keep them. A Chapter 7 bankruptcy will wipe out any unsecured debt. A Chapter 13 bankruptcy, on the other hand, is what\u2019s known as a repayment plan.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4171,4168],"tags":[],"class_list":["post-2864","post","type-post","status-publish","format-standard","hentry","category-bankruptcy-basics","category-credit-and-debt"],"yoast_head":"\nSecured vs. Unsecured Debt | Duncan Law<\/title>\n<meta name=\"description\" content=\"Secured debt is tied to property; unsecured debt isn't. 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