What is the difference between secured and unsecured debt?

In Rhode Island, secured debt and unsecured debt are both types of debts that individuals may incur during times of financial hardship. Secured debt is debt that has a collateral attached to it, such as a car loan or a mortgage. This means that if you fail to make payments on the loan, the lender can take the collateral to repay the loan. Unsecured debt, on the other hand, does not have any collateral attached to it. This type of debt includes credit cards, medical bills, student loans, and personal loans. It is important to understand the difference between secured and unsecured debt if you are considering filing for bankruptcy in Rhode Island. In Chapter 7 bankruptcy, unsecured debt is usually discharged, meaning that you no longer owe on it and the creditor cannot try to collect it. However, secured debt is usually not discharged, meaning that you may still need to make payments on it. Thus, even if you file for Chapter 7 bankruptcy, you may still have to make payments on secured debt. In contrast, filing for Chapter 13 bankruptcy in Rhode Island will allow you to keep your collateral and pay off your debt over a three to five year period. This is a better option if you have secured debt, as it allows you to keep the collateral while still paying off the debt. In conclusion, secured debt is debt that has a collateral attached to it while unsecured debt does not have any collateral. Secured debt is not usually discharged in Rhode Island when filing for Chapter 7 bankruptcy, but it is an option with Chapter 13 bankruptcy.

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What is the difference between secured and unsecured debt?

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