If you are one of the many people in Minnesota who cringes when you go to your mailbox for fear that yet another bill is in there, you know how stressful this type of situation can be. Instead of living with the pressure that unmanageable debt brings to your life, you might want to find out if filing for bankruptcy can help you. Among the many decisions you will need to make when evaluating a potential bankruptcy is which type of plan is right for. This may depend in part on what type of debt you have the most of.
The Balance explains that debts may be classified into one of two categories – secured and unsecured. Secured debts are basically those that are attached to some type of tangible collateral. A car loan, for example, is essentially secured by the vehicle itself. This means that if you default on a loan, the lender may take the vehicle from you. A mortgage is another type of secured debt.
On the other side of things, unsecured debt has no collateral. This means that creditors have no ability to seize your assets in order to secure some amount of repayment. Examples of this type of debt include medical bills, credit card debt or store charge card debts. A Chapter 7 bankruptcy may discharge these types of debts completely.
This information is not intended to provide legal advice but is instead meant to help Mississippi residents understand the different types of debts so that if they need to file for bankruptcy, they are able to know which plan type might be right for them.