When a bankruptcy case is filed, the various types of debts are classified into various categories: secured, priority unsecured, general unsecured, or administrative claims. This post will discuss secured debts and how they are often treated in a bankruptcy case. What is a secured debt? A secured debt is a debt in which the lender has some sort of collateral as a “security” for a loan.
In other words, the lender has the ability to repossess some collateral if the debt is not paid. Typical secured debts are home loans, car loans, boat loans, and furniture loans. In order for a creditor to claim secured status, they are required to do certain technical things, such as record their lien, and do a few other things.