Equity is generally computed by subtracting the total amount of liens from the total fair market value of the property. The liens on a property occasionally add up to as much as or more than the property is worth. The liens held by many secured creditors cannot be eliminated in bankruptcy. If the debtor wants to keep the liened property, these debts must be paid during or after bankruptcy. However, bankruptcy does offer various ways of solving problems with secured debts and sometimes offers ways of eliminating liens.
Most debts are unsecured debts, which are, in a sense, ordinary debts.
They may be owed to individuals or to businesses and may result from loans, purchases and even liability for an accident or a wrong done to another person. The distinguishing feature of an unsecured debt is that the creditor does not have a lien on any of the debtor's property. This means that the creditor has no special rights above those of other creditors to obtain repayment from any particular piece of property owned by the debtor. Generally, unsecured debts may be discharged, or eliminated, in bankruptcy. However, certain types of unsecured debts are exceptions to this rule and are nondischargeable.