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What You Need To Know About Loans And Bankruptcy

DebtFiling for bankruptcy can be a very trying time for anyone. Those who file usually have suffered a severe financial setback that is typically the result of something such as a divorce or a large medical expense. The whole process is emotional and difficult. What most who go through the process do not understand is how their debts are discharged. This is especially true of loans.

Discharging Unsecured Loans

An unsecured loan is one that is not backed by collateral. Most unsecured loans are “secured” by a signature. These loans include personal loans and credit cards. A personal loan, just like a credit card, is one where the loan is given and, in return, the debtor promises to repay it. The majority of debts in a personal bankruptcy are of the unsecured variety. Since these loans are not backed by anything, they are easy for a creditor to write off.

In a Chapter 7 bankruptcy, these types of personal loans and credit card debts are usually written off by the creditor or satisfied in some other way. If an individual files a Chapter 13 bankruptcy, they are agreeing to repay their debts through a negotiated payment plan. Unsecured debts are normally not the focus of a Chapter 13 bankruptcy, but can be rolled into a payment plan. The discharging of unsecured loans is much simpler than secured loans.

Discharging Secured Loans

Collateral is the key to a secured loan. A mortgage, a car loan, and a title loan are all examples of secured loans. Each of these types of loans is backed by an asset. Should the borrower default on the loan, the creditor can take possession of the asset. These types of debts are a bit more difficult to handle when it comes to a bankruptcy.

Secured loans are more difficult to deal with in a bankruptcy because there are often two different lenders involved. A car title loan, for example, could have been obtained through a company like Florida’s Embassy Title Loans, one of the state’s premier consumer finance companies. However, the car may have been purchased with a loan from a bank. Both would be entitled to possession of the car or any proceeds from a payoff.

Mortgage debts cannot simply be written off. A Chapter 13 bankruptcy can help someone stay in their home by negotiating a payment plan. Some secured loans – such as home equity loans – may be written off, but an individual’s mortgage debt still must be repaid.

It is important for anyone who even thinks about bankruptcy to understand what types of loans can be discharged and how. A person can make a better decision about their financial future with this knowledge.



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Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

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Embassy Loans uses “Title Loans” for advertisement purposes only and provides auto equity loans. Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” under Florida Statute 516 and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

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Frequently Asked Questions

What is an Auto Equity Loan?

An auto equity loan, sometimes known as a car title loan or a car equity loan, is a type of loan that allows you to borrow money by using your vehicle as collateral. The loan is secured by your vehicle, meaning you agree to use the equity in your car to back the loan. 

What is an Unsecured Personal Loan

An unsecured personal loan is a loan that does not require collateral. Funds are provided based on your credit worthiness and your ability to repay. 

What Is the Credit Builder Program

The credit builder program is designed to help individuals establish or improve their credit score with the primary purpose of building a positive credit history through regular payments.

Can i have more than one Loan at a time?

Embassy Loans can only extend one loan at a time and it’s advisable to start with one and focus on making payments in a timely manner to prevent default.

What happens if I miss a payment?

Missing a payment can have negative consequences, including late fees, a drop in your credit score, and potential default on the loan. Consistent, on-time payments are crucial to benefit from the program.