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Secured and Unsecured Debt

What Kind of Debt Do You Need to Eliminate?

The type of debt you are trying to overcome needs to be taken into consideration before filing bankruptcy. At the law firm of Hickson Law, PC, our lawyer starts every case by analyzing the type of debt involved. She will take great care in guiding you toward the debt solution that makes the most sense based on your debt load.
She is a Consumer Bankruptcy Attorney Board Certified by the Texas Board of Legal Specialization with decades of experience who will work with you personally from start to finish.

Secured Debt and Bankruptcy

Secured debt is any debt attached to collateral. Home loans and car loans are examples of secured debts, because they are attached to the home and the car, respectively. These debts may be discharged through bankruptcy. However, the lien attaching to the collateral is not discharged. This means that the debtor needs to choose between keeping the collateral and continuing to make payments or surrendering the collateral to the creditor and discharging the debt.
In Chapter 7 bankruptcy, many other debts are eliminated, making it much easier for people to continue payments on those debts not eliminated. In Chapter 13 bankruptcy, secured debt is restructured. Sometimes the secured debt is considered secured only up to the value of the collateral and only that part must be paid in full. The balance will be treated as unsecured debt and often only a fraction of that is repaid. Such a reorganization and consolidation of debt may result in less money that needs to be devoted to servicing the debt and more left over to cover necessary living expenses, which may make Chapter 13 a more manageable option.

Unsecured Debt and Bankruptcy

Unsecured debt is not attached to any collateral. Credit card debt and medical debt are among the most common types of unsecured debt, all of which are dischargeable in Chapter 7 bankruptcy or subject to a repayment plan in Chapter 13 bankruptcy. The Chapter 13 plan may only require a small portion of these debts to be paid off.