What Kind of Debt Do You Have?
There are different types of debt and each are treated differently in a bankruptcy case. The type of debt you have can determine whether a certain debt is dischargeable under a bankruptcy. It’s important to discuss all of the types of debt you have with your attorney at Wood & Brewer, so you can make the most informed choice about the best bankruptcy for you.
1. Secured Debt: If a debt is secured, it is typically secured by a piece of collateral (for example, a car or a home). Typically, in a Chapter 7 bankruptcy, a secured debt needs to be current and continue to be paid on time if the client wishes to retain the property. In a Chapter 13 bankruptcy, some types of debt can be paid through the case and as long as all payments are made on time with the Trustee, the client’s interest in the property will be protected.
2. Priority Debt: If a debt is priority, it usually involves taxes or some type of domestic support obligation (like child support or spousal support). After a detailed analysis by Wood & Brewer, a client will find out if they can discharge any type of priority debt, based on their specific circumstances. In some instances, a client will be able to discharge tax or debt in the nature of support if it meets certain criteria.
3. Unsecured debt: If a debt is unsecured, it does not attach to any type of collateral. The most common types of unsecured debts are medical bills, credit cards and signature loans. In many cases, discharging unsecured debts does not come with many obstacles. However, it’s important to advise your attorney if you’ve incurred any debt within the past 90 days, so a detailed look can be taken at that debt.
No matter the different types of debt you might have, we can work together to find the best bankruptcy option and ensure our clients are on the path to a fresh start!