Moody, AL—Debt can be categorized as secured debt and unsecured debt. The most common form of debt individuals accrue is unsecured debt. Unsecured debt is debt “that has no collateral backing.”1 Credit cards, student loans, and even personal loans are some examples of unsecured debt. So, if an individual were to default on payments to their credit card company, there wouldn’t be any assets it could seize in exchange for the default in payments.

 

Secured Debt

 

Unlike unsecured debt, secured debt is backed by collateral. Some personal loans are also considered secured debt. For example, if an individual with bad credit was seeking a $5,000 secured loan and they found a lender that would provide them with it, they likely would be required to agree to give the lender the title to their vehicle before the loan is disbursed. This way, if they default on the loan, the lender would have the right to seize their vehicle and wouldn’t take a loss.

 

Can a debtor be sued if they default on payments to a creditor?

 

Yes, creditors can sue a debtor if they default on their payments. However, if a lender is able to recoup all of the money that is owed on a secured loan by seizing a person’s vehicle, they wouldn’t have reason to file suit. But, if an individual defaulted on their credit cards, then the credit card company or even a debt collection agency that purchased the debt could file a civil lawsuit against the debtor.

 

Should a debtor file for bankruptcy in Alabama if they are being sued by creditors?

 

Bankruptcy can generally stop any lawsuits in their tracks. Therefore, if an individual has accrued a substantial amount in debt and they are being sued by one or more creditors, they should consider consulting with a Moody, AL bankruptcy lawyer.

The Moody, AL bankruptcy attorneys at Hill, Gossett, Kemp & Hufford, P.C. will help an individual understand the bankruptcy process and determine if it is a suitable option for them to get their finances back on track. The lawyers at Hill, Gossett, Kemp & Hufford, P.C. have office locations in Moody, Leeds, and even Springville and would be happy to sit down and discuss with an individual whether bankruptcy is the right option for them.

 

Disclaimer: No representation is made that quality of legal services provided is greater than the quality of legal services provided by other attorneys.

 

Hill, Gossett, Kemp & Hufford, P.C. can be reached at:

 

Moody Office

2603 Moody Parkway, Suite 200

Moody, Alabama 35004

Phone: (205) 640-2000

Website: www.hwhlawgroup.com

 

Leeds Office

7900 Parkway Drive

Leeds, AL 35094

Phone: (205) 699-5500

 

Springville Office

6441 U.S. Highway 11

Springville, Alabama 35146

Phone: (205) 467-2225

 

Source:

  1. https://www.bankrate.com/personal-finance/debt/secured-vs-unsecured-debt/
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