In bankruptcy, a secured claim falls between a priority claim and an unsecured claim in terms of priority. A priority claim such as alimony, tax debts or court judgments must be paid in full. Unsecured claims have the lowest priority and are often discharged in bankruptcy. Creditors with a secured claim can be sure to get some payment, usually determined by the value of the collateral securing the claim.

Secured Debt

A secured debt is connected to property that acts as collateral. Common examples are a mortgage on a house or a loan for the purchase of a car.

Secured Claim

In bankruptcy, a secured claim is an assertion to collect on a secured debt. A creditor with a secured claim can prevent other creditors from collecting the property that serves as the collateral to which the creditor has a pre-existing interest.

Cram Down

A secured claim is not guaranteed to be paid in full, despite the existence of the collateral property. If the value of the property has fallen below the amount of the secured debt, the debtor can "cram down" the debt, which is to limit it to the value of the collateral property.

Option to Pay

A debtor in Chapter 13 bankruptcy has the option to pay the cash value of the collateral behind a secure debt in order to keep the property. Otherwise, the debtor can be forced to surrender the property to the bankruptcy trustee.

Reaffirmation

Another option the debtor has is to reaffirm the debt, though this is rare. In reaffirmation, the debtor agrees to continue making regular payments on the secured debt to keep the secured claim out of bankruptcy and to keep possession of the property.

Source:

U.S. Courts: Types of Claims

Lawyers.com: Secured Claims

Nolo: How Much You'll Have to Pay

More Information:

Secured Claim

Payment to Secured Creditors in Bankruptcy