Consumer debts can be one of two types: secured or unsecured. Understanding whether your debt is secured or unsecured is vital when considering consumer debt relief, like filing for Bankruptcy with a Utah Bankruptcy Attorney.

Secured Debt in Utah Bankruptcy

Secured debt requires a lender to take on less risk because they hold an asset, called collateral, to reclaim if the debt is not repaid as agreed. For example, a car that is held as collateral on a title loan can be repossessed and auctioned by the lender if payments are not made as promised. A home can be foreclosed upon if you fail to pay your mortgage payments, so the lender can recoup the credit they extended for the purchase of the home.  Utah Bankruptcy lawyers are well versed in all of the options that would allow you to restructure your secured debt that isn’t discharged in bankruptcy since every situation is unique.

Unsecured Debt in Utah Bankruptcy

Unsecured debt is extended to the borrower based only on their previous creditworthiness and promise to repay, with no collateral. The most common unsecured debt is credit card debt. If you fail to make payments, the credit card issuer can’t repossess the items you purchased on your credit card. However, they can request that a court garnish your wages, they can hire collections agents to hound you, and they can report you to credit bureaus affecting your ability to be approved for any credit in the future.

How Bankruptcy affects Secured and Unsecured Debts

In a Utah bankruptcy, unsecured debts are discharged, or eliminated—with the exception of court fines, child support payments, and student loans. You will no longer have to pay credit card bills, unpaid utilities, or unsecured personal loans and lines of credit.

Secured debts, however, are not included in a bankruptcy. You will not be relieved of mortgage debt, assuming you have little or no equity in your house. This generally means that you can retain secured properties that are not considered assets, like your home or car, and can continue to make payments as agreed, which may be more comfortable after the elimination of unsecured debts but every situation is unique and only a Utah bankruptcy attorney can tell you how your secured debts would be affected.

Talk to a Utah Bankruptcy Attorney About Your Options

If you are unable to manage your debts, secured and unsecured, you need to speak to a Utah bankruptcy attorney and learn about your rights and options. The attorneys at Fillmore Spencer LLC offer free initial bankruptcy consultations in English and Spanish and can help you make informed decisions as you get your finances back on track.


If you still have questions, contact us for a free consultation with one of our Utah Bankruptcy Attorneys. 

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