What Is The Difference Between Secured and Unsecured Debt

There are two major types of debt: secured and unsecured debt. Secured debts are backed by a tangible asset, like a house or car, while unsecured loans rely on the borrower’s credit score and ability to repay it back without consequence.  If you are considering filing for bankruptcy, it is also important to understand the different types of debts that can be discharged.

What Are Secured Debts?

Secured Debts have a physical asset that is of equal value to what you are borrowing. 

Secured debt can include:

• Mortgages
• Car loans
• Home equity loans or lines of credit

What is Unsecured Debt?

Unsecured debts are not backed with assets. Unsecured debts do not give lenders the right to any collateral for the debt.

Unsecured debts can include:

• Credit cards
• Personal loans
• Federal student loans
• Medical debts

Lenders cannot seize assets with unsecured debts, but instead they often find alternative means to obtain payment. They may hire debt collectors as well as sue the borrower and ask courts for a garnishment of wages or put a lien on your assets until the debt is paid off.

Experienced Birmingham Bankruptcy Attorneys



If you are dealing with overwhelming debt, filing for bankruptcy may be the path to financial freedom. If you have unsecured debt, there are various bankruptcy options that can eliminate creditor harassment and can alleviate some liabilities. In most cases, you can reaffirm your secured loans and keep your assets. Our team at C. Taylor Crockett, P.C. has been helping families throughout Birmingham, Alabama become debt-free. Our team has the knowledge, experience, and skills needed to help you. Contact the office of C. Taylor Crockett, P.C. today to schedule your FREE consultation.