While debt can come in a variety of forms, it typically falls under one of two categories: secured and unsecured debt. Those facing dire financial straits may find that understanding the difference between these two categories could play a vital role in preparing to seek debt relief. Individuals in Kentucky who are exploring the possible benefits of filing for bankruptcy may find this topic could have a significant influence on the decisions they make when seeking to protect their financial futures.
Secured debts typically refer to financial obligations in which there is an item of value that acts as collateral. Examples of secured debts may include mortgages and auto loans, and should a person fall behind on similar obligations, the lender may attempt to recover losses by taking possession of the collateral. Alternatively, unsecured debts do not involve the presence of collateral and some of the most common examples of this type of debt may include credit card and medical debts.
For those exploring the possibility of filing for bankruptcy, knowing the difference between these two categories could prove imperative. For instance, Chapter 7 bankruptcy and Chapter 13 bankruptcy both have their own options and processes concerning secured and unsecured debts. Understanding the possible advantages and disadvantages of each available option could help place a person in a much better position to choose the best path with which to proceed.
Filing for bankruptcy is a major financial decision and with a variety of options to consider and factors to address, choosing a path for relief can be an intimidating process. Those who face a similar circumstance and wish to seek insight in making informed choices about their situation could find it helpful to consult with an attorney as soon as possible. An attorney can examine the circumstances a client in Kentucky is facing and assist in developing a plan to reduce or eliminate his or her debts through the proper channels.