What is the difference between unsecured and secured debts?

Debts are generally classified as either unsecured or secured. As a debtor, it is important to understand the difference between these two, as they can have very different effects on your life and finances. An unsecured debt is a debt without any sort of collateral backing it. This includes credit card debts, medical bills, and other personal loans.

On the other hand, secured debts are ones where creditors can repossess or seize property if the debtor fails to make payments on the loan. Mortgages and car loans are two common secured debts. Unlike unsecured debts, these debts are generally not discharged through bankruptcy.

For more information about unsecured and secured debts, contact a Cedar Rapids bankruptcy attorney of Hong Law, PLC, at (319) 294-5853 today.