What is the difference between secured and unsecured debt?

The difference between secured and unsecured debt relates to how the debt is backed. In West Virginia, secured debt is backed by collateral, which gives the lender the right to reclaim the collateral if you default on the loan. Examples of secured debt include mortgages and car loans. On the other hand, unsecured debt is not backed by any collateral. Credit card debt is the most common type of unsecured debt. When you take out a credit card, you agree to pay back the money you borrow, but the lender does not have any collateral that can be taken if you default. Bankruptcy laws provide ways to help debtors settle their debts in West Virginia. Depending on your financial situation, you may be able to discharge most of your unsecured debt. However, secured debt is harder to avoid. You may be able to negotiate a payment plan that works for you and your lender, or you may need to surrender your collateral to the lender in order to satisfy your debt. Either way, it is important to work with an experienced bankruptcy lawyer to make sure you are in compliance with West Virginia’s bankruptcy laws.

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