Secured And Unsecured Debt Assistance
One step in deciding whether to file bankruptcy is to examine your secured and unsecured debt. The type and amount of debt you have is one factor in determining whether Chapter 7 or Chapter 13 bankruptcy is right for you.
The Differences Between Secured and Unsecured Debt
Secured debt is debt that is collateralized by a house, vehicle or other tangible property. The loan you took out is secured by the property. If you are behind on payments for secured debt, the lender or lien holder may foreclose on the property. This is sometimes called repossession, especially when the property is a vehicle. The lender takes the property back and sells it to recover their losses. They may try to foreclose after you miss only one or two loan payments.
Unsecured debt is debt that has no tangible property to secure the loan. Typical examples of unsecured debt are credit card debt, signature loans and medical bills. There is nothing to repossess in these situations. Secured and Unsecured debt may both be discharged under Chapter 7 bankruptcy and under Chapter 13 bankruptcy.
However, unsecured creditors can obtain a judgment against you and can take property from you that is not exempt. Sometimes in a Chapter 7 or Chapter 13 bankruptcy, your non-exempt assets as determined by Texas Property Law and Federal Bankruptcy Law can be taken by the trustee and sold to satisfy your creditors. Exemption planning with an experienced attorney prior to filing bankruptcy can help you protect the value of those assets.
If you file bankruptcy, you can receive an automatic stay. During this time, no collection actions can be taken against you, including foreclosure. This can give you a chance to modify the loan and keep the house or car. That's why Chapter 7 and Chapter 13 bankruptcy is a viable option to keep unsecured creditors from obtaining a judgment in the future and taking your non-exempt property.
Contact an Experienced Bankruptcy Lawyer Today
The Law Offices of Coats & Todd help people in Plano, Richardson and across Texas file for bankruptcy. Our attorneys can help you review the types of debt you have and explain your options. Please call our office at 972-671-9922 to schedule your free consultation.
