In a bankruptcy it is important to understand which of your debts are secured as you will have to decide whether you surrender the property or reaffirm the debt. Secured debts are debts that are linked to some type of property. The most common types of secured debts are your car payment and your house payment. Additionally, there are other types of debts that can be considered “secured” by the creditor.
Purchases on credit for items such as jewelry, expensive electronics, tools and furniture can all be considered secured debts. Generally these purchases are considered unsecured.
However, some people think that a certain debt is just regular consumer credit card debt. When in fact the agreement they entered into when they received the debt was actually a purchase money security agreement.
A purchase money security agreement is just what it sounds like. It is an agreement to lend you money to purchase an item that will secure repayment of the debt. Should you stop paying the debt, the creditor can repossess the item.
A purchase money security agreement is an example of a voluntary secured debt. Regardless of whether you understand that the items you purchase on your Nebraska Furniture Mart card are secured or not, when you purchase those items you are doing so willingly.
If you do not pay your income or property taxes, you could easily end up with a lien on your home or other property. Depending on the situation, your property could be foreclosed or repossessed.
If you owe a mechanic for work he has done on your car or a contractor for household repairs, they will often file liens against your car or home respectively. The lien may just remain on your property prohibiting you from selling or otherwise transferring the property before the debt is paid.
However there is one more involuntary lien that you should be aware of. Click here to read about it.