Stockton Bankruptcy Lawyer Discusses the Difference Between Secured and Unsecured Debt
When debts are piling up and creditors are hunting you down day and night, the last things on your mind are the subtle differences between the debts you owe. Many people don’t realize that those differences are incredibly important and will completely determine the course of action you should take. Only a qualified and experienced Stockton bankruptcy lawyer will be able to determine whether or not bankruptcy is right for you, but understanding the differences between your outstanding debts will help save you a lot of time and stress.
Unsecured debt is a term used to group debts that are not backed, or secured, by any collateral. This means that whoever lent you the money (the creditor) did not have any collateral to hold onto in the event that you defaulted on that debt. Because the debt was unsecured, the creditor charged you an expensive borrowing rate to compensate. Because of the high interest rate it carries, this type of debt can quickly balloon into an insurmountable sum if you are not careful. Bankruptcy is largely used to wipe out these types of debts, as the high interest rates eventually compound the principal until it is essentially impossible to pay back.
Secured debt is the opposite of unsecured – this is debt that has been backed by collateral. The most common example of secured debt include mortgages and auto loans. Your creditor will have the right to confiscate the collateral that you used to back your secured loan if you do not pay. The creditors are able to charge you a lower interest rate for this type of debt because they do not carry the same level of risk as an unsecured creditor who does not have access to collateral in the event of default. Secured debt is more complicated to have wiped out during bankruptcy, and more often than not, your debt will be wiped away, but the collateral will be taken, meaning that you would lose your house or car.
I Don’t Want to Lose My House!
There are many different types of bankruptcy that can be filed and many different options outside of bankruptcy that can be taken. Each route taken will have a different set of costs and benefits. These are unique for every situation and every person, and a Stockton Bankruptcy lawyer can help you decide which avenue suits your needs best.
Call Our Stockton Bankruptcy Lawyer Today!
We can get the creditors off your back immediately! As soon as we start the process and file, creditors will be legally barred from contacting you and you will have your peace and quiet back! No one deserves to be harassed, call our Stockton bankruptcy lawyer today!