Question: Suppose that Debbie borrows $600,000 from David in return for a mortgage on her house. If she does not repay the debt, he can foreclose.

Suppose that Debbie borrows $600,000 from David in return for a mortgage on her house. If she does not repay the debt, he can foreclose. Unfortunately, property values plummet, and by the time Debbie files a voluntary petition in bankruptcy court, the house is worth only $400,000. What type of creditor is David, secured and/or unsecured and does he need to file a proof of claim?

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