Unsecured Debt and Bankruptcy
If you have a good deal of unsecured debt, bankruptcy may be the best way to discharge these debts and give yourself a fresh financial start. Unsecured debt is treated differently than secured debt in a bankruptcy proceeding, but you cannot simply keep all your secured debt and discharge your unsecured debt. Instead, it is important to talk with an attorney like those at the Oswalt Law Group in Phoenix with years of experience in handling bankruptcy. An attorney can help you determine the best way to handle both your secured and your unsecured debt.
What Is The Difference Between Secured and Unsecured Debt?
Secured debt is that debt which is secured by something of value. The object that secures the debt is known as collateral. Collateral could be a home, a car, furniture, a savings bond or anything of value. Unsecured debt, on the other hand, is not secured by any valuable items. It is simply money that has been loaned to you on your good faith promise to pay. Credit cards are a common example of unsecured debt. Even though you may purchase items with your credit card, generally you are not obligated to return the items when you file bankruptcy.
Unsecured Debt and Chapter 7
If you have mainly unsecured debt, Chapter 7 may be the best way to handle your bankruptcy. This is because Chapter 7 is basically designed for those debtors who need to discharge unsecured debts and get a fresh financial start. Secured debt is more complicated to handle under Chapter 7, so if you own a home or a vehicle, you may want to think about a Chapter 13 instead.
Unsecured Debt and Chapter 13
If you need to file a Chapter 13 bankruptcy, you can still discharge a great deal of unsecured debt. The amount will depend on how the court treats your secured assets and how much they are worth. If you do not own valuable assets, the court may allow you to reaffirm those debts and simply discharge your unsecured debt. However, if you have valuable assets, the court may require you to pay a certain portion of your unsecured debt. If you have questions about unsecured debt and bankruptcy, contact the Oswalt Law Group in Phoenix. These attorneys can help you file the right type of bankruptcy and handle your secured and unsecured debts properly.