Secured Vs Unsecured Debts

Posted by Charles Nguyen on November 22, 2021 at 5:30 AM

Chapter 13 Bankruptcy Plan Payments in MinnesotaWithin your bankruptcy schedules, there are two types of debt that the bankruptcy court require you to disclose – secured and unsecured.  Understanding what type of debt a bankruptcy debtor has will help them understand their bankruptcy better and with their finances once they’ve completed their bankruptcy. 

What is Secured Debt?  Secured debt is debt that is connected to property, most commonly, your house or a car.  Examples of secured debt include mortgages, home equity lines of credit (HELOCs), and car loans.  So, if you don’t pay these debts, then the lender can take that property away from you and then demand any amount your property didn’t cover to satisfy the loan. 

What is Unsecured Debt?  Unsecured debt is debt that is not connected to property.  Examples here include credit cards, an unsecured personal loan, a line of credit, unpaid rent, utility bills, medical debt, and student loans. 

What happens to these debts in bankruptcy? If you file a chapter 7 and the case is successful, then your liability for most of the unsecured debt will go away.  You’ll have to continue paying on your student loans.  If you have secured debt, then you may surrender any property tied to that debt and have that debt be included, or keep paying the secured debt until the loan is completed.  In a chapter 13, you may continue to pay your secured debt as normal or include it in your repayment plan, where that secured debt is given priority and will be paid off over 3 or 5 years.  The remaining unsecured debt will be paid back a percentage based on your disposable income.  

So, if you’re thinking of filing for bankruptcy, and or if you have questions or are ready to get your life back, reach out to Minnesota’s nicest bankruptcy law firm by going to  You won’t regret it! 

Topics: Business Debt, debt settlement

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