Debt can come in many forms. Two of these forms are secured and unsecured
debt. Most debts fall into one of these two categories, but the way these
debts are handled can be very different. The differences between these
debts can help both consumers and businesses decide how to borrow money,
prioritize debts for payoff, and work to protect your assets.
Secured debts are one major form of debt that is tied to an asset. The
asset is considered collateral for the debt. If the borrower falls behind
on their payments, the lender has the right to take the asset. If the
lender takes control of the asset, it is likely that the asset will be
sold to pay back your debts. If the sale of the asset doesn’t completely
cover the value of the debt, you will still be held liable for the rest
of the debt, and the lender may pursue you for the difference.
Examples of a secured debt include mortgages and auto loans. The property
or vehicle is used as collateral for the loan, and if you default on the
loan, the asset can be foreclosed or repossessed. There are also other
types of debt that are considered secured, such as a title loan. You are
not the full owner of an asset until the attached debt has been paid off.
With an unsecured debt, you do not need to provide collateral for the debt.
Typically, your assets cannot be taken when you fall behind on these debts.
There are other actions that can be taken to get payment, however. These
- Hiring a debt collector to pursue payment
- Garnishing your wages
- Taking an asset
- Placing a lien on your assets
Your delinquency will also be reported to credit bureaus so it can appear on your
credit report. This can lower your credit score. Lenders of secured debts may also make
credit reports against you.
Credit card debt is the most common form of unsecured debts.
Student loans, payday loans, medical bills, and child support payments are also considered
forms of unsecured debt.
Getting a Handle on Your Debt
Knowing which debts to prioritize can help you pay them off more quickly
and ensure that you still maintain the ownership of your home, car, or
other assets. Secured debts typically are tied to something that is necessary,
such as a home, and losing this asset can be catastrophic. It is typically
in your best interest to prioritize secured debts to be paid off first.
Our New York
debt relief attorney can help. We can provide you with guidance to help you pay back
your debts, negotiate with creditors, help you fight creditor harassment,
and more. At the
Law Office of Simon Goldenberg, PLLC, we understand how difficult debt can be, and we are experienced in helping
out clients find relief from their debt. Learn how we can help you!
Contact our offices to request a
free initial case evaluation.