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Secured Debt Defined

When talking about debt, especially in the context of a bankruptcy, it is important to understand that there are different types of debt.  In the bankruptcy system, debts are broken up into three main categories on the bankruptcy schedules.  There is Secured Debt, Priority Debt, and Unsecured Non-Priority Debt.  Outside the bankruptcy system, debt is generally catergorized as secured and unsecured debt.  Although, there are other intricacies that should not be overlooked which include, without limitation, secured debt that resulted from a purchase money security interest (often referred to as PMSI) and tax debts.

In the context of loans, a secured debt is backed up by some sort of property which serves as collateral for a loan.  The idea of a secured debt is that a borrower promises to repay a loan, and if that loan is not repaid, the secured creditor is allowed to take back the collateral.  Common secured debts include things like car loans (usually secured by the car being financed) and mortgages (usually secured by the house being financed).  The repossession of secured collateral is often what leads to people filing for bankruptcy protection.

It is also important to note that not all secured debts result from a loan.  Sometimes liens are placed upon property circumstances.  One example of how this can happen is with taxes.  Various types of taxes might attach to your home.  In particular, real estate property tax under Kansas law automatically becomes a secured interest on the real property that is being taxed.  Income taxes also can become an involuntary lien on real estate.

Another non-tax related situation that can lead to a lien on your home is through a mechanics lien.  An example of when this might occur is if a company installed a new roof on a house and the home owner did not pay them, then the company who performed the work can file a lien against property.

These examples of how secured debt can occur are only some of the examples of this can occur and is not by any means an all inclusive list.  Also, with each scenario there are exceptions and caveats to each one and anyone facing such a situation should consult a Topeka lawyer to understand their legal rights.


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!