Can secured debt ever become unsecured debt?
A. A secured debt may become an unsecured debt in situations where the property securing the loan has already been repossessed and sold by the creditor. If the sale of the property does not meet the contractual obligation, the consumer then owes a deficiency balance. This deficiency becomes an unsecured debt. Certain exceptions may apply and will depend on the security interest. DRA is not a law or accounting firm, and as such can not provide specific advise as to legal or tax issues so DRA encourages every consumer to discuss these issues with their tax and legal advisors.
