What is the difference between secured creditors and unsecured creditors?

A "secured creditor" is a creditor that has a lien on property. A lien is an interest in property that a creditor can use to satisfy a debt. Some liens are voluntary, for example a mortgage or a security interest in a car. Other liens are involuntary, for example a lien on property resulting from unpaid taxes or a judgment.

An "unsecured creditor" is a creditor who has no interest in any of your particular property. Outside of bankruptcy, there are only two ways unsecured creditors can get paid. The way in which most unsecured creditors are paid is through your voluntary payment of the debt owed. The other way unsecured creditors get paid is much harder. They must sue you, get a judgment against you, and ask the sheriff to seize your particular property and sell it to satisfy the creditor’s claim.

Even in bankruptcy, the secured creditor has greater protection because its lien on your property is usually honored. The bankruptcy does not remove it

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