What is Unsecured Debt?
A San Francisco bankruptcy attorney explains what unsecured debt is...
Unsecured debt is a loan that is not backed by any underlying asset or collateral. Essentially, you are given money without having to provide anything in return or have any property tied to the loan. Examples include credit cards and personal lines of credit.
How is unsecured debt different than secured debt?
Secured debt is backed by collateral or property whereas unsecured debt is not. When you buy a car you usually take out a loan, and the loan is backed by the car, which can be repossessed in order to satisfy the loan amount. When you take out a personal line of credit or use a credit card, there is no guarantee of property that can be repossessed in order to repay the loan amount.
How is unsecured debt treated in bankruptcy?
Unsecured debt is given a very low priority in bankruptcy. Depending on which chapter you file under and you income, unsecured debt is either completely discharged or repaid at a very low percentage of the actual outstanding balance. For most people who file bankruptcy their unsecured debt is completely discharged.
Because no collateral is backing the loan, can I just stop paying my credit cards?
Unsecured creditors still have ways to collect on the amount owed. This generally involves filing a lawsuit against you, obtaining a judgment, and then garnishing your wages. If you have had an unsecured creditor obtain a judgment against you for an outstanding loan and your wages are either being garnished or are about to be garnished, it may be smart to file for bankruptcy. Filing for bankruptcy will stop the wage garnishment and discharge the judgment amount.
If you have questions regarding bankruptcy in San Francisco or bankruptcy in the greater Bay Area please contact our San Francisco Bankruptcy Attorneys at (415) 946-8882 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Francisco Bankruptcy Attorneys. After you have spoken with one of our Bay Area bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Customer Care Specialists and Bankuptcy staff supporting San Francisco and Bay Area consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Francisco Bay Area!
