Secured vs. Unsecured Debt
Secured and Unsecured Debt Attorney in Portland, Oregon
When a person declares bankruptcy, one of the first hurdles to consider is how the law affects various types of debt you have, in particular whether the debt is secured or unsecured debt. Because those two are different and have different statutes affecting their legal treatment, seeking the advice of a reliable secured and unsecured debt attorney in Oregon is the best way to handle the situation.
Your debt attorney will help you plan and give you the best professional assistance needed for the problem.

Although declaring and filing for bankruptcy should be the last resort, considering different bankruptcy alternatives is a good start. If you’re having trouble with debts and need a professional secured and unsecured debt attorney in Portland, Oregon, you can book a schedule now to start your journey towards debt relief. Our expert and experienced attorneys will carefully assess your debt situation and educate you on all the possible solutions and alternatives to bankruptcy.
Even if you don’t need to file bankruptcy, understanding the difference between secured and unsecured loans can help you improve your financial literacy. It can even help you make wise decisions for better financial health and stability in the
long term. By working with an expert secured and unsecured debt attorney in Portland, Oregon, you can better assess the situation and clear all your debt problems smartly.
To start, we should first discuss the difference between secured and unsecured debt. Which one should you prioritize paying first?
What is Secured Debt?
A secured debt is a form of debt backed by the debtor’s property, such as a house or car used as collateral.
A secured debt is almost always secured or created with written documents, signed by the borrower, that “attaches” the debt to the collateral. The law calls this attachment a “lien”. This means that when a debtor enters in secured debt, they give the creditors a right to seize specific property. The creditors can take the property when the debtor fails to pay the credit based on the agreed specified time frame. There are also two types of lien – a voluntary and involuntary lien. An experienced Portland secured and unsecured debt attorney can help you clearly understand how the lien and other types of debt can affect you. And also whether you can strip the lien in your property.
Voluntary Lien
With a voluntary lien, the debtor is consensually approving or granting the creditor a legal right to the property as a form of security to repay the debt. A voluntary lien can be “perfected” when the creditor files written proof with the State office responsible for such filings. A “perfected” lien provides notice to the world (and future creditors) that this creditor has a legal right over the collateral items. The perfecting of a lien is a mandatory action to give the creditor authority – which applies to different state laws and collateralized property types. A common type of voluntary lien is a mortgage on a residence or a notation on a motor vehicle title that a lender exists.
Involuntary Lien
An involuntary lien is imposed on a debtor via state or court action. A state stature may give a creditor a right to seize or confiscate the debtor’s property if the debt is left unpaid. This can also happen via court action when the Court enters a “judgment” against a debtor can may become an involuntary lien against real property. These liens include income tax, real estate, judgment, or landlord liens.
Advantages and Disadvantages of a Secured Debt
Most secured debts or loans are common ways to borrow large amounts of money, services, or items. Most secured loans have lower rates, higher borrowing limits or capacity, and even longer repayment terms because of the collateral.
- Lower rates
- Higher borrowing limits or capacity
- Longer and better repayment terms because of the collateral
From the creditor’s point-of-view, the security against the collateral makes the loan “safer” than a similar unsecured loan. When you secured a loan – this mostly means that you’re providing security that the debt will be repaid – or else risk losing the property.
When the creditor seizes the asset, they will sell them and then apply the money realized to the debt owed. If the property doesn’t sell for enough money, then a “deficiency balance” will result. The debtor will still owe the deficiency balance even though they no longer have the property.
Common Types of Secured Debt
Home Equity Loan
A home equity loan is a type of loan that allows a debtor to borrow money against the equity in their home. This is a voluntary secured lien and the home is collateral.
Car Loan
A car loan is a very common type of secured debt. Without a car loan, most people could not afford to buy a car. The lender loans you money with the car as collateral. If you do not make payments on the car loan, the lender will “repossess” the vehicle. BEWARE – since cars depreciate rapidly, it is common that a borrower will owe a deficiency if the car is repossessed and sold.
Mortgage/Deed of Trust
A mortgage or deed of trust is the most common type of secured debt used to buy a house. If you fail to make the payments a required, then the lender can take the house away thru the “foreclosure” process. It is much harder to take away a house than it is to repossess a car, so the foreclosure process takes a long time.
What is Unsecured Debt?
Unsecured debt is the opposite of secured debt. This is a type of loan or credit that has no collateral or legal properties securing the debt. With unsecured debt – the creditor or lender doesn’t have any legal rights to confiscate the debtors’ personal property if they default on the payment terms. Think about using your credit card to buy groceries, or auto fuel or a dinner out – if you don’t make the credit card payments they cannot come after you and take back the groceries! BE CAREFUL – some “credit cards” used to purchase durable goods like furniture actually do carry security interests that secure the debt to the furniture purchased.
Due to a lack of security on the creditor’s part, unsecured debts always give a very high interest rate. Debtors almost take this type of loan with a minimal credit history and bad credit.
Advantages and Disadvantages of a Unsecured Debt
Because of the risk on the creditor’s part, most unsecured debts have higher interest rates. They also give minimal payment terms for debtors, which can be pretty restrictive. An advantage to being considered on unsecured debts or loans is the easy access to the loans. Mostly, you can use the credit immediately for emergency needs such as medical bills or last-minute flights.
Types of Unsecured Debt
Credit Card Debt
Most credit cards don’t require collateral, and are a common type of unsecured debt. A credit card is typically “open ended” with a specific credit limit and no future date when the loan is closed. The lender doesn’t care what you purchase and generally does not pre-approve any purchase so long as you have available limit on the account. A credit card is a loan that must be repaid at a later date. Most credit card issuers make massive profits on fees and interest and charges and it can be very difficult to get out of credit card debt on your own as the balances become insurmountable.
Student Loans
Students loans are for students who need help paying educational expenses such as tuition, books, school or educational supplies, and living expenses. These are almost always unsecured debt.
Medical Debt
Medical debt is almost always unsecured (we have seen cards secured to dentures but have never seen a creditor actually seek to recover THAT collateral!)
Personal Loans
Personal loans are similar to credit cards except they are usually for a specific amount which is given to you at the time of the loan. It is a “close ended” loan because you don’t continue to borrow against it and you pay the loan back over a specific period of time.
If you’re dealing with unsurmountable debt and you want them discharged, our Portland debt attorneys can help. Bankruptcy can be a confusing and stressful process. We are here to help by providing the service of a bankruptcy and debt attorney who will explain the process, answer your questions, and walk you through the paperwork. We provide exceptional service, taking the hard out of bankruptcy whether you’re dealing with secured or unsecured debt.
Consult a Secured and Unsecured Debt Attorney in Portland Today!
Secured and unsecured debts vary from one another in terms of the payment terms creditor can impose. Choosing whether to take a secured or unsecured loan depends on the debtor’s financial situation and whether the creditor will make the loan. Knowing which one to choose can lead to a more healthy economic life and a better credit score.
If you are on debt and looking for debt relief, seeking professional help from a secured and unsecured debt attorney from Portland, Oregon, will provide insights on which debt you should prioritize first. The risk of losing your property or the continuously increasing unpaid loan and interest from the creditor can result in a lawsuit.
Your secured and unsecured debt attorney can help you identify the character of the debt and then help you analyze which creditors should be paid and what order to pay them. Remember, with unsecured debt, creditors must file a lawsuit in court first before they are authorized to seize the debtor’s assets and property as collateral.
If you find yourself is such a situation, you can book a free case evaluation with our Oregon debt attorneys. If you are from Bend, Clackamas, Portland, and surrounding communities in Oregon and need debt relief, bankruptcy alternatives, or even legal support against unlawful seizure of property, our bankruptcy, and debt attorneys can help. We at Michael D. O’Brien and Associates take your privacy seriously and guarantee the utmost confidentiality in your case and situation. Schedule a case evaluation with our Portland bankruptcy law firm today!
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