If you are one of the many consumers in Virginia who continues to struggle with a mound of debt that only seems to increase despite your best efforts to pay it off, you might have given thought to filing for bankruptcy. Before you make a final decision about a bankruptcy, you will need to know which type of plan could best suit your needs. One element that should be evaluated when making this decision is the amount and type of debt you carry.
As explained by The Motley Fool, there are two primary forms of consumer debt. One of these is called secured debt and the other is called unsecured debt. The difference between these two forms of debt is whether or not there is any type of collateral associated with the debt. If there is some asset tied to the debt, such as with a vehicle loan or a home mortgage, then the debt is determined to be secured. This means the lender has the potential to recoup some of the debt in the form of asset seizure if payments are not made.
If you have a high level of secured debt, you may risk losing assets in a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, assets are not lost. For this reason, a Chapter 13 plan is often used by homeowners or other consumers who have a lot of secured debt.
If you would like to learn more about the different types of consumer debt and how your debt profile might influence what type of bankruptcy plan is best for your needs, please feel free to visit the consumer debt relief page of our Virginia bankruptcy website.