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Understand your debt relief options based on the kinds of debt you have

The first step toward resolving heavy debt issues is acknowledging the problem. Then ask yourself, "What are my options?"

To begin answering that question, it is important to understand what kinds of debt you have. In terms of filing for bankruptcy, there are two types of debt: secured and unsecured. Here let's discuss the difference and how these debts can either be eliminated or paid down with a more manageable repayment plan.

Secured debt is what you owe on a property that is secured by a lien. For example, car loans and home mortgages are secured debts. A lender can actually take the property if you stop paying down a secured debt. 

Other kinds of secured debt include what you owe on home appliances, electronics or furniture, but lenders tend to be less likely to repossess these items because doing so usually doesn't make financial sense for the lender.

When you file for bankruptcy, your personal liability for the debt is eliminated, but the lien on a secured debt remains. You may still be able to keep the property, though, if you continue making payments. It may also be possible to renegotiate or modify a secured debt through Chapter 13 bankruptcy, which involves reorganizing the debt and creating a manageable repayment plan.

Examples of unsecured debt include medical bills, credit card bills and payday loans. These debts are not attached to any kind of property that a lender could repossess. Unsecured debts can be handled through Chapter 7 or Chapter 13 bankruptcy. Chapter 7 allows for unsecured debts to be entirely discharged, and Chapter 13, as we said, allows you to pay back part of the debt. Usually, with Chapter 13, you pay back a significantly lower amount than you owe.

To understand which debt relief path is right for your situation, don't hesitate to speak with a local bankruptcy law attorney.

At Goldman & Beslow, LLC, we help people throughout Northern New Jersey resolve their debt problems and make a fresh start.

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  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
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Goldman & Beslow, LLC

Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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