Chapter 7 Bankruptcy
A debt you owe, where the creditor generally cannot repossess an asset to satisfy the debt. Also, a debt secured by property that is worth less than the debt.
Example: A vehicle you originally purchased on credit for $20,000 two years ago, has depreciated in value so that now it is only worth $12,000. If you have made $200 payments over the last 24 months, you have made $4800 in payments. Therefore, you owe $15,200 on your vehicle financing statement. Because the vehicle is now only worth $12,000 you have $3,200 of unsecured debt in your vehicle because $15,200 – $12,000 = $3,200