By: Darrell Castle

Understanding the difference between a secured debt and an unsecured debt is pretty simple.

A secured debt is something that’s backed up by collateral – something tangible that can be taken away from you if you don’t make your payments.


The most common secured debts are your mortgage and car. If you fall behind on your mortgage, then your lender has the right to take your home from you – foreclosure. If you fall behind on your car payments, then your lender has the right to take your car from you – repossession.

Then, unsecured debt, of course, is debt that is NOT backed by collateral – there’s nothing tangible the creditor can take away from you if you don’t make your payments.

Common unsecured debts are medical and credit card debt.

If you fall behind on your medical or credit card bills, the creditor will typically do one of two things.

  1. The creditor will hire a debt collector to harass and annoy you into paying your debt.
  2. The creditor will file a lawsuit with the court to gain the ability to garnish your wages from your employer. 

But, why let the creditor take your property, harass you or garnish your wages? If you fall behind on your bills, there’s a way to avoid those pitfalls.

By filing for Chapter 7 bankruptcy, you can discharge all of your unsecured debt and usually keep all of your property IF you are current on the payments. You also have the option to discharge your secured debt, but in doing so, you won’t be able to keep your property.

If you’re behind on the payments and you WANT to keep your property, then you can file Chapter 13 bankruptcy, which is a reorganization of your debt into an affordable repayment plan over a longer period of time.

The best thing to do if you’re in debt is to sit down and talk to an experienced bankruptcy attorney. An experienced bankruptcy attorney will listen to your story, look over your finances and help you decide whether bankruptcy is right for you as well as which chapter.

You need an attorney you can trust, though. You need an attorney who’ll walk and talk you through every step of the process. You need an attorney who has your best interest at heart.

Darrell Castle & Associates has received multiple Client Distinction Awards from Martindale-Hubbel because we have your best interest at heart.

One of the ways we show that is by providing you with the tools to succeed after a bankruptcy. We proudly use Dave Ramsey’s Debtor Education course, which is a video course that is not only very financially beneficial, but entertaining as well!

If you’re considering filing for bankruptcy, or if you just want to sit down and talk to someone about your financial situation and see what your options are, then contact my office.

Call (901) 327-2100 to schedule a FREE consultation with an experienced attorney, or fill out one of the contact forms on this page.