Bankruptcy Basics: Overview
There are basically two types of creditors: secured and unsecured. Secured creditors, in general, are those that have an interest in the debtor’s house, car, or other property evidenced by a security agreement, statutory lien, or judicial lien. Unsecured creditors do not. Secured creditors are treated more favorably under the Bankruptcy Code than unsecured creditors. However bankruptcy does allow debtors flexibility in dealing with secured debt. Most secured debt can be altered in some way during the bankruptcy with very significant benefits for the debtor.