Not all debt is treated the same way in bankruptcy. The type of bankruptcy you file may depend on the nature of your debt. When you choose an attorney, make certain you select someone with the knowledge and flexibility to file your case in the best possible chapter for you, regardless of your debt load. At Balbus Law Firm, we are skilled at reducing or eliminating unmanageable consumer debt and business debt
in all forms utilizing all bankruptcy chapters.
Secured Debt vs. Unsecured Debt
One of the most important distinctions to understand between types of debt is the difference between secured debt and unsecured debt. Secured debt is debt that is secured by some form of collateral that the creditor could reclaim if payment is not made, like a house or car. Unsecured debt is debt that has no collateral attached to it.
Unsecured debt, such as credit card debt and medical debt, is the easiest to eliminate through bankruptcy. Secured debt cannot be eliminated if you intend to keep the collateral. Bankruptcy will not prevent a secured creditor from repossessing property if you stop making payments. As a result, you must continue to make mortgage payments and car loan payments.
Under certain circumstances, however, secured debts may be reduced or restructured. If you are behind on mortgage or car loan payments, Chapter 13 bankruptcy may help in allowing you to repay past-due amounts while retaining the collateral.
Dischargeable Debt vs. Nondischargeable Debt
Certain debts cannot be discharged in bankruptcy, including child support, alimony, student loans, criminal fines and debts incurred fraudulently. Most tax debts are also nondischargeable. Past due amounts may be payable as part of a Chapter 13 plan in some cases. The relief provided by eliminating dischargeable debt often makes the remaining debt manageable.
To Answer Your Questions About The Treatment of Different Kinds Of Debt In Bankruptcy, Contact Us For A Free Initial Consultation
To learn about how bankruptcy addresses different types of debt in a free initial consultation, call 203-286-4121 or email us.
Balbus Law Firm is a debt relief agency. We help people and businesses in New York and Connecticut file for bankruptcy relief under the Bankruptcy Code.