Most debts fall into three categories: (1) an unsecured debt, where the creditor has no lien on your real or personal property, (2) a secured debt, where the creditor has a lien on your personal or real property (for example, a mortgage or auto loan)and (3) a judgment debt, where the creditor has sued you and obtained a judgment.

It is essential to know the difference when negotiating with creditors because the remedies available to creditors for these types of debt vary widely. For example, a creditor without a judgment may be in a weaker bargaining position than a judgment creditor.