What is the difference between secured and unsecured debt?

In Wisconsin, the difference between secured and unsecured debt is very important to understand when declaring bankruptcy. Secured debt is a debt that is backed by a physical asset. This means that if the debtor fails to pay back the loan, the creditor can repossess the item that was used as collateral. Common examples include car loans, mortgages, and home equity lines of credit. Unsecured debt, on the other hand, is debt that is not backed by a physical asset. This means that if the debtor fails to pay back the loan, the creditor cannot repossess any physical assets and can only pursue legal action to try to collect the debt from the debtor. Common examples include credit card debt, medical bills, and student loans. When filing for bankruptcy in Wisconsin, it is important to understand the difference between secured and unsecured debt in order to know which debts you can discharge and which debts will stay with you. In a Chapter 7 bankruptcy, secured debts may be discharged if the collateral is surrendered and unsecured debts will be discharged regardless. In a Chapter 13 bankruptcy, secured debts may remain in place, depending on the repayment plan that is agreed upon and unsecured debts may be discharged partially or completely depending on the repayment plan.

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What is the difference between secured and unsecured debt?

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