Boston Bankruptcy Attorney

Secured vs. Unsecured Debt

There are two main types of debts: secured debt and unsecured debt. There is a very easy way to determine if a debt is secured or unsecured. This can be done by determining whether the creditor can take away an object or a piece of property if the debtor suddenly becomes unable or unwilling to make payments on the amount owed.

If a creditor is capable of taking away tangible property or some other item that is tied to the debt in some way, the debt is secured. If nothing can be taken away from the debtor if he or she stops paying or is unable to continue paying, then the debt is said to be unsecured.

Typically, unsecured debts are credit cards. The majority of credit cards are unsecured debts, unless the debtor holds one of the very few secured cards available on the market. A secured credit card can be a prepaid card, or a card that is secured by some other property or project. A prepaid credit card is generally secured by the amount of the actual deposit on the card. Medical bills are also considered unsecured debts because the patient did not have to put up an item as collateral in acquire the debt.

Secured debts typically encompass large ticket items, such as mortgages and cars. If an individual fails to keep up with the mortgage payments, the bank or other mortgage lender can take the home as payment. If the car payments are not met, the lender who holds the loan on the vehicle can and will repossess the car.

Contact a Boston Bankruptcy Lawyer

If you are facing difficult financial decisions and are concerned you are unable to meet all of your monthly expenses, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to discuss your situation.