Long Island Bankruptcy Attorney
Secured and Unsecured Debt
The types of debt that you faced with is a determining factor when faced with bankruptcy. It’s necessary to choose the appropriate Bankruptcy Code to fit your debt.
In order to make the correct choice, you will need to understand the difference between the types of debt you have.
There are two types of debt, secured debt and unsecured debt.
Secured Debt
When debt is backed by collateral, it is considered to be secured debt. Your car, for example is secured, or “collateralized” by the car itself.
Your home loan (mortgage) is secured by the value of the home.
If you fail to meet these obligations, the lender (bank) has the legal right to seize the property which secures them.
The decision to file under Chapter 13 of the Bankruptcy Code when faced with unmanageable debt is most often used by people when the major portion of their debt is secured debt.
Chapter 13 gives the debtor an opportunity to establish a repayment plan for the amounts that in delinquency, as well as, a payment plan that allows the family to keep their property going forward.
An experienced Long Island bankruptcy lawyer will be able to review your financial situation and assist you in understanding your available options.
Unsecured Debt
Unsecured debt is a debt that is not backed by collateral. Credit cards and medical bills are both examples of unsecured debt and most often the reason a majority of people find themselves burdened with unmanageable debt. These are agreements made with a creditor (bank or credit card issuer) that allow for a certain borrowing limit, to be paid back in accordance with predefined terms.
Failure to comply with the terms, results in higher interest rates, penalties, and a host of other fees.
These fees and penalties, often times cause the debt to become unsustainable
Chapter 7 of the Bankruptcy Code, allows debtors to eliminate their unsecured debt.
It is often referred to as a “straight bankruptcy” or a “fresh start” bankruptcy filing. Once the bankruptcy has been filed and then discharged, the debtor can walk away from their debt with no further obligation to the creditor(s).
The Right Debt Relief Solution
The Law Offices of Loscalzo and Associates provide comprehensive consumer debt relief services. From our offices in Long Island, New York we help clients in Nassau and Suffolk counties with consumer bankruptcy filings and other debt relief solutions.
Contact us today for a free and confidential consultation with a member of our legal team. We can evaluate your financial circumstance and guide you toward a sensible solution.
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