The next letter in the bankruptcy alphabet, U, stands for unsecured debt. Unsecured debt is any debt that someone owes for bills where no collateral was pledged. What does that mean? I can tell you what is not an unsecured loan to explain. Examples of collateral are houses and cars. So loans where you pledge your house as collateral (a mortgage) or a car (car loan) are secured debt. If you don’t make payments on your mortgage, the bank will foreclose on your house; likewise, if you don’t make payments on your car loan, the finance company will repossess the car.
Loans where you don’t have collateral, then, are unsecured loans. Unsecured debts are typically debts like credit cards and medical bills. Most unsecured debts can be eliminated in Chapter 7 Bankruptcy. These are the debts and bill collectors that can be the most aggressive in their collection attempts. These collectors are often quick to sue someone who is behind in their payments and to garnish debtors’ wages. It makes sense, because they have nothing to “fall back on”, no collateral, to help pay off the loan.
A bankruptcy case will stop the lawsuits and phone calls from the aggressive, annoying, bill collectors right away.
If you have unsecured debts that you are having problems paying, or if you are being sued, or just need advice on what to do, call us.
We have offices in the Chicago Loop, Oak Lawn, Skokie, and Waukegan to serve your needs.
LAW OFFICES OF DANIEL J. WINTER
53 W. Jackson Boulevard
Chicago, IL 60604