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Return To Bankruptcy FAQ Archive   What is the difference between secured and unsecured debt in a bankruptcy? Answered By Editor Secure debt is the type of debt that is secured from the creditor by collateral. Things such as a car which is bought on payments through a loan or a home that is mortgaged are considered secure debt. This is because the creditor has the option of requiring the collateral to be returned to them if the credit that is extended is not paid. An unsecured debt is any debt that does not involve a tangible asset. Debts that fall under this category would be things such as cash money borrowed against personal credit either from a lending institution or a private individual, credit card debt, medical bills or other types of debt that do not involve a tangible asset. In bankruptcy, the court will decide if secured debt collateral should be returned to the creditor, liquidated or paid for through the bankruptcy budget on a slow payment plan. Unsecured debt is usually not paid or only partial paid through a bankruptcy plan and is eliminated from your credit record after the bankruptcy is discharged by the court. Some types of unsecured debts cannot be eliminated by the court. You can elect to pay some types of unsecured debt through your bankruptcy plan if you can show proof to the court that you are able to make the payments and a valid reason why those unsecured debts should be paid while others are not. keywords: Bankruptcy | Bankrupt | Creditors | Debt | Debt Relief | Secured Debt | Collateral | Unsecured Debt Debt Settlement Reduction Debt Settlement Tax

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