Not all debts are created equal and debtors who understand the differences have a huge advantage.

Cash flow is the life-blood of the economy.  It’s how we get the things we need to live, work and play.  It’s how we build our wealth.  These days, more and more of that cash flow is credit extended from banks and other financial groups.  This sort of lending, if done wisely, greatly benefits our society.  It allows us to accomplish more than we would otherwise be able to do.

From time to time, we incur special debts specifically for the purpose of acquiring large, costly assets such as homes and automobiles.  The agreement made between the creditor and the debtor specifies the assets the loan will be used to acquire, a car, for example.  The contract also gives the creditors rights to that asset if the debtor breaks the contract.  This type of debt is known as secured debt.

A secured debt has a specific asset attached to it.  Loans for a car or home are the most common examples.  Secured debts often have low interest rates because the contract provides the creditor with rights to the asset if the debtors breaks the contract.  This lowers the creditor’s risk.  When debtors stop making their payments, due to Bellevue bankruptcy or any other reason, they break the contract.  This is why debtors can lose their assets after going through chapter 7 Bellevue bankruptcy.

Every debtor planning for Bellevue bankruptcy needs to take a careful look at their finances.  Debtors should separate secured debts from unsecured debts.  While unsecured creditors still have a general claim on the debtor’s assets, it is easier to defend against them than secured creditor claims.  This means that unsecured debts (such as credit card and medical bills) are easier to discharge in Bellevue bankruptcy than secured debts like home mortgages.

Thankfully, Bellevue bankruptcy isn’t all or nothing.  Debtors can choose which debts they want discharged and which they want to keep.  If you only had your credit card and medical debts discharged, would that be enough debt relief for you?  Debtors need to consider and answer these questions for themselves.  If you can get control of your finances by only discharging unsecured debts, you will have a much better chance of keeping your assets.

The key to a successful Bellevue bankruptcy is proper planning.  Fill out a free evaluation today and let us help you plan for success.

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