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St Louis Bankruptcy Attorney: How Is A Secured Debt Different From An Unsecured Debt?


In a St Louis bankruptcy, it is vitally important to make sure that secured and unsecured debts are handled properly. The main difference between the two is that a secured debt has some sort of asset attached to it as collateral (such as a mortgage attached to a house, or a car note attached to an automobile), and an unsecured debt does not. Below is a more thorough discussion:

Filing for bankruptcy involves a process of dealing with your debts. For instance, in a St Louis Chapter 7, all unsecured debts are discharged (i.e. knocked out forever). Examples of unsecured debts would include credit cards, medical bills, payday loans, old gym memberships, etc. This is the most significant attribute of a Chapter 7.

But of course if you have secured debts (like a mortgage or car note), then those are handled quite differently. If you wanted to get out from underneath the secured debt, then you can always surrender your ownership interest back to the creditor. This would release you from any further obligation on the debt itself, but you would of course have to give the asset back.


Or if you wanted to keep the asset, then it becomes a question of equity (as in, how much equity exists in the asset). For example, if you own a 2009 Toyota Camry that has a balance of $7,000. The fair market value of the car is approximately $10,000. The court gives you a $3,000 exemption to cover any equity in a car. So in this example, keeping the 09 Toyota would not pose any problems (because the governmental exemption covers the equity that exists). If you wanted to keep the car, you would just continue make the regular monthly payments.

The best way to learn how the whole thing works is to of course set an appointment with us!! Our consultations are free of charge!! We will answer your questions, describe your full range of options, and help guide you through the process from start to finish!

The affordable St. Louis bankruptcy attorneys at The Bankruptcy Company have been saving and protecting people’s assets for years. Our goal is to make sure that you keep the assets and property you want, discharge the debts that you want to get rid of, and do it all at an affordable cost to you. All phone conversations and office consultations are free of charge.

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