Secured Debts

Anyone struggling with heavy debt, whether or not they choose to file for bankruptcy, should be aware of the distinction between secured and unsecured debts. In short, secured debts are debts that are “secured” against failure to pay by agreeing to give the lender a claim of ownership of some of your assets or property as a kind of collateral. In contrast, filing for bankruptcy can discharge certain types of unsecured debt entirely.

Perhaps the most common example of a secured debt is the mortgage. Mortgages are essentially very large loans from a bank to an individual to allow them to purchase a house without already having the means to do so. Given how incredibly expensive houses are, it makes sense that the bank would want some kind of security against debtors who fail to pay. Consequently, mortgages generally stipulate that failure to make your payments can result in the bank taking the house away from you.

There are many other types of secured debt as well, including most automobile loans. Some debts are not secured in quite the same way as a house, since not all debts involve a specific piece of physical property. Student loans cannot be discharged, even though the bank is not literally capable of taking your education away from you. Debts to the government and child support must also be repaid in full.

Both unsecured and secured debts are real debts and must be repaid, but filing for bankruptcy can result in certain types of unsecured debt being discharged. While filing for bankruptcy is not a magical cure-all, in many cases it provides the most efficient and cost-effective way to repay your debts and take back control of your life.

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If your debt load has grown too large to handle, contact the compassionate Boston bankruptcy lawyers of Joshua Spirn & Associates today at 800-975-5346 to learn more about your options for getting a fresh financial start.