Partially secured debt - sustany/dvg GitHub Wiki

A partially secured debt is a form of secured debt in which debt is backed by collateral with a value lesser than that of the full debt owed. Also known as undersecured debt. Such a debt can be illustrated, for example, with a home valued at $750,000 used to secure a $1,000,000 mortgage on that home. It is generally not in the best interest of a business to seek unsecured or partially secured debt, as this can hinder efforts to reorganize via filing for Chapter 11 bankruptcy.

An unsecured creditor�s claim on debt can be split into the following: a secured claim for the value of the debtor�s collateral, and an unsecured claim for the difference between the secured claim and the total debt. A debtor is able to pay down the unsecured portion of a partially secured debt only with property that does not have a lien placed upon it.��

Additionally, if the sum of an individual�s interest-bearing balance of debt exceeds a security interest�s maximum limit or share of a residence, any excess debt is not treated as secured debt. The total debt in such a scenario is effectively partially secured.