What is the difference between a secured and unsecured debt in Chapter 13 Bankruptcy?

In Chapter 13 Bankruptcy Law in South Carolina, a secured debt is linked to an asset, such as a house or a car, which the debtor can lose if the debt is not repaid. An unsecured debt does not have an asset attached to it and so the debtor cannot lose any property if they fail to repay the debt. A secured debt requires the debtor to make payments to the creditor in order to keep ownership of the asset the debt is linked to. The debtor may also be able to negotiate a payment plan with the creditor in order to make the payments more affordable and this plan would have to be approved by the court. If the debtor does not make their payments on time, the creditor may be able to repossess the asset used as collateral. On the other hand, with an unsecured debt, the debtor may be able to negotiate a payment plan or a debt settlement with the creditor but there is no asset for the creditor to take if the debtor fails to make their payments. In Chapter 13 Bankruptcy, unsecured debt is given less priority than secured debt and is often discharged in bankruptcy. This means that the debtor is not expected to repay the debt in full and any remaining balance is wiped away.

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What is the difference between a secured and unsecured debt in Chapter 13 Bankruptcy?

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