This is very different from credit card debt, where a creditor usually must file suit for money owed, rather than repossess collateral. Although bankruptcy can discharge both secured and unsecured debts the lien is generally not eliminated by filing bankruptcy. Translation: if you want to keep your house or car- you have to keep paying.
Although we stated earlier that credit card debt is unsecured debt, there is a rare instance when it may be considered secured debt. When a store such as “Best Buy” or “Rooms to Go” issues a credit card or extends credit for you to buy merchandise in store they may take what is called a “Purchase Money Security Interest” in your I-Pad, Refrigerator, or Bedroom Set. Although used items are rarely worth pursuing, the creditors do retain the option.
Our next post will deal with discharging tax debt in bankruptcy, which is usually unsecured debt, but may be become secured debt in the event of a filed tax lien.