What is the Difference Between Secured and Unsecured Debt in Bankruptcy?
When you are planning to file for consumer bankruptcy , you may have heard that there is a difference between how secured and unsecured debt will be handled. If you are thinking about Chapter 7 bankruptcy , it is unlikely that you have many (if any) assets that the bankruptcy trustee will be able to liquidate in order to repay creditors. At the same time, it is important to understand how secured and unsecured debts are likely to be treated in your bankruptcy case. If you have questions or concerns, an Oak Park bankruptcy lawyer can help. What is Secured Debt in a Bankruptcy Case? Secured debt is not only a term that is used in personal bankruptcy cases, but also in relation to certain types of debt outside the context of bankruptcy. A secured debt is a particular type of debt that has been secured by property, or for which the creditor has a lien. According to the Cornell Legal Information Institute (LII), a secured debt is defined as “a creditor’s claim that is secured by a lien ...