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

In Chapter 13 Bankruptcy law in Washington, secured debts and unsecured debts are two distinct types of debts that are treated differently when debts are discharged. A secured debt is one that is backed by collateral. In the event of a default, the creditor can seize the collateral, such as a car or a house, to make up for the losses incurred by the debtor. Unsecured debt, on the other hand, does not require collateral and has no immediate means of recovery for the lender. Credit card debt, medical bills and personal loans are common examples of unsecured debts. In Chapter 13 Bankruptcy law, secured debt must be paid back in full before unsecured debt can be discharged. This means that a debtor must use the available funds to pay off the debt, as well as any associated costs, such as legal fees, before any money can be used to pay off unsecured debt. Secured debts are paid back first and unsecured debt is paid off with the remaining funds, if any. A debtor has the right to voluntarily choose to pay back unsecured debts, even if the full amount of a secured debt is paid back. Knowing the difference between secured and unsecured debts is important for anyone considering filing for Chapter 13 Bankruptcy because it will determine which debts will be paid off first and how much money needs to be paid back. Additionally, it helps debtors understand their legal rights and obligations in the repayment process.

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

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