What is unsecured debt, exactly?
And what happens to that debt if you choose to file bankruptcy? First, let’s examine what kind of debt this is. Unsecured debt is not “secured” by any property or collateral, which means that it cannot cause a lien against your property and that your property cannot be taken away from you in order to pay the debt. Unsecured debt includes debts from credit cards and lines of credit, certain medical bills, department store cards, and cell phone bills. In other words, a cell phone company cannot take your cell phone back as payment for your overdue bill, and a department store cannot take back the clothing you purchased from their store to pay your store credit card bill. Unsecured creditors can try to get paid through many means, including the use of collection agencies, letters, phone calls and credit reporting, but they truly have no other legal recourse in getting this debt paid back to them. In a typical bankruptcy case most, if not all, of your unsecured debt will be canceled when y
