Difference Between Secured and Unsecured Debt in a St. Louis Bankruptcy
There are two main types of debts: secured and unsecured. A debt is secured if there is some sort of underlying collateral to which the creditor has attached itself. A common example of this would be an automobile loan or a home mortgage. When the debt was created, the creditor perfected the loan by taking out a secured interest in the collateral itself (i.e. the house or the car). This is an important step for the creditor, because if the individual defaults on the loan, the creditor can take back the asset in question (through either foreclosure or repossession).
An unsecured debt is just the opposite. It is a debt that has no underlying collateral to which the creditor can attach itself. A common example of this would be a credit card or medical bill. Since there is nothing that a creditor can attach a secured interest to, the only recourse for the creditor is to file suit against you (in a small claims action or for breach of contract).
Whether the debt is secured or unsecured, the St. Louis bankruptcy lawyers at The Bankruptcy Company have a great deal of experience in handling either kind. Depending on which type of debt it is, our staff can file a St. Louis Chapter 7 bankruptcy or a St. Louis Chapter 13 bankruptcy to effectively manage your debts, and make sure you receive the fresh start / clean slate that you deserve.