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Secured versus Unsecured Debt

Various types of debt are treated differently in both Chapter 7 and Chapter 11 bankruptcy filings. Not all debts are discharged during a bankruptcy filing. However, bankruptcy can generally eliminate or consolidate most unsecured debts, except in certain cases like delinquent student loans and back taxes. A team of qualified Reno bankruptcy lawyers can help determine which type of bankruptcy is right for you.

Secured debt is tied to a specific asset. One the borrower stops paying the loan, the lender can seize the asset in an attempt to satisfy the loan. In cases of depreciating assets, such as a car, the asset may not satisfy the loan. In these cases, the lender can pursue you for the difference. Examples of secured debt include:

  • Mortgages
  • Home equity loans
  • Motor vehicle loans
  • Store charges with a security agreement
  • Personal loans with collateral backing them up

Unsecured debts are not tied to your property. Creditors cannot seize any personal property without a judgment from a court order. A Chapter 7 lawyer in Reno can help you deal with unsecured debts. Common types of unsecured debts include:

  • Credit cards
  • Student loans
  • Medical bills
  • Lawyer fees
  • Rent
  • Utility payments

In the case of a nonconsensual lien, you have pledged property as security for the loan. A money judgment or a tax lien is an example of a nonconsensual lien. When a lien is placed against your property, it means the creditor has secured an interest in the property.

If you are experiencing tough financial hardships, call the Darby Law Practice, Ltd. Focused in bankruptcy law, we are a law firm dedicated to helping you get back on your feet.

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