There is a Big Difference Between Unsecured Debt and Secured Debt

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There is a Big Difference Between Unsecured Debt and Secured
Debt
Des Moines, IA (Law Firm Newswire) July 15, 2011 - There is often a whole lot of confusion over what the
differences are between secured and unsecured debt.
"Bankruptcy proceedings get complicated enough that most people get confused over what the differences
are between secured and unsecured debt, or if there are any differences at all. There are definitely
differences, and when you speak to an experienced lawyer, this is one of the first conversations you should
have," said Kevin Ahrenholz, an Iowa bankruptcy lawyer.
One of the main problems with people understanding the bankruptcy jargon is that those familiar with it use it like
it was a regular language - and it is, to them. To those facing bankruptcy and trying to cope with their financial
distress and figure out what the terms mean, it is just one more thing that alienates them. "Most bankruptcy
lawyers will take the time to explain the various terms, as it is something that helps put their clients at ease,"
Ahrenholz said.
A secured debt is a loan, and in return for the money, the creditor takes a secure interest, also referred to as a
security interest, in the item. "For example, if you have a loan for a house or car," Ahrenholz said. "Having said
that though, just about any loan may be secured, so long as the creditor gets a security interest in whatever the
item happens to be."
The thing people need to remember about secured debts is that the remedy for default is typically seizing the
asset, either by foreclosure or repossession. In addition, if a creditor does go that route, they may also be able to
recover any financial short fall after the repo or possession. "Since you can't discharge this, an experienced
Iowa bankruptcy lawyer is better able to negotiate with creditors, than you trying to do it on your own," he said.
Unsecured debt is the result of a contract between a buyer and a creditor, but it is not tied to a security
agreement, and does not give the creditor the same options to collect on default of payment that a secured
creditor has. "In other words, the debtor is saying they promise to pay it back. Examples of unsecured debt are
personal loans, medical bills and credit card debt," Ahrenholz said. Unsecured debt is discharged in a
bankruptcy.
To contact an Iowa bankruptcy attorney, Iowa Chapter 7 bankruptcy attorney, or
set up an appointment visit http://www.iowachapter7.com or call 1.877.888.1766.
Kevin Ahrenholz
309 Court Ave., Suite 805
Des Moines, IA 50309
1.877.888.1766
Offices in Des Moines, Cedar Rapids, Waterloo, Mason City, and Vinton.
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