In general, unsecured debt consists of money owed to entities or individuals such as medical providers, credit card companies, or merchants, and payment of these debts is not guaranteed by an interest in any asset. Unsecured creditors depend on consumers paying what is owed; as such, unsecured creditors are not as secure as creditors who hold an interest in real property as security. Additionally, the collection process is quite costly, and if the person who owes the debt has filed for bankruptcy, unsecured creditors are generally below secured and other creditors when it comes to bankruptcy distributions.

In general, unsecured debt consists of money owed to entities or individuals such as medical providers, credit card companies, or merchants, and payment of these debts is not guaranteed by an interest in any asset. Unsecured creditors depend on consumers paying what is owed; as such, unsecured creditors are not as secure as creditors who hold an interest in real property as security. Additionally, the collection process is quite costly, and if the person who owes the debt has filed for bankruptcy, unsecured creditors are generally below secured and other creditors when it comes to bankruptcy distributions.

Given the unsecured nature of this debt, unsecured creditors may be more inclined to reach some sort of agreement when a couple or an individual is suffering financially. Such agreements can include a reduction in the required monthly payment, the removal of interest, or a substantially discounted settlement of the entire balance. That said, a discussion with the creditor in an effort to reach an agreement can go a long way in materially reducing the debt that the marital estate is required to pay. A knowledgeable San Diego family law attorney can help facilitate that dialogue, should you deem it necessary.

If arrangements can be made prior to the valuing and dividing of the marital estate, then neither individual is put at a financial disadvantage. Conversely, one party may be required to pay a large portion of the unsecured debt, and, accordingly, he or she will also be given a large amount of the compensating assets. However, if that individual has the ability to negotiate and get a considerable reduction in the debt owed, then ultimately, he or she has received a larger piece of the marital estate than is fair. It may benefit you if you and your spouse make whatever deals can be struck with creditors before the marital estate is settled. If you need a San Diego family law attorney, please contact Lisa Zonder.