What is the difference between secured and unsecured debt?

Secured debt is debt that is collateralized or backed by some type of property. When you take out a loan from a bank, they usually require you to pledge some form of collateral, such as a house or car, to back the loan. If you then fail to repay the loan, the bank can seize your property to pay back the loan. Unsecured debt, on the other hand, is debt that is not backed by any form of collateral. Credit cards and most medical bills are examples of unsecured debt. If you fail to repay an unsecured debt, the creditor can take legal action against you but cannot repossess any of your property. In Delaware, when filing for bankruptcy, any secured debts will be repaid according to the terms of the loan agreement. Unsecured debt, however, may be discharged or forgiven depending on the type of bankruptcy being filed. For example, in a Chapter 7 bankruptcy, all unsecured debt is typically discharged.

Related FAQs

Does filing for bankruptcy stop foreclosure proceedings?
What will happen to my creditors if I file for bankruptcy?
Is bankruptcy a public record?
What is the difference between secured and unsecured debt?
How do I change my name after filing for bankruptcy?
Can I file for bankruptcy if I'm unemployed?
How long does the bankruptcy process take?
Can I keep my car when filing for bankruptcy?
What kind of debt counseling is available before and after filing for bankruptcy?
What is the difference between discharging and writing off a debt?

What is the difference between secured and unsecured debt?

Related FAQs

Related Blog Posts