Understanding the difference between secured and unsecured debt can help you form a strategy for negotiating with creditors during divorce proceedings. An Orange County family attorney can explain more about this aspect of your divorce and how it can benefit you.
Secured vs. Unsecured Debt
As your Orange County family lawyer will explain, secured debt means debt backed up by collateral. Your mortgage, for example, is likely your largest secured debt. If you default or fail to pay, your bank can take possession of your house through foreclosure proceedings.
In contrast, unsecured debt is not guaranteed by collateral. It is debt you incurred by a mere promise to pay. Credit card debt is an example. As your Orange County family lawyer can tell you, the card company can sue you for nonpayment but cannot foreclose on your house. Unsecured creditors are usually “last in line” to get paid in the event of a bankruptcy proceeding.
Negotiating With Unsecured Creditors
Since unsecured creditors do not have collateral or specific property to go after should a debtor fail to pay, they may be more willing to negotiate with your Orange County family attorney. If successful, your lawyer can work to significantly reduce the amount of debt owed by you and your soon-to-be-ex spouse in what’s called your marital estate.
Speak to an Orange County Family Attorney Today for Legal Assistance
For more help in understanding how marital debt can be split, contact Orange County family attorney Bethanie Fanti today. Call 714-505-3108 to schedule a free initial consultation.