If you are feeling burdened by debt, filing a bankruptcy case may provide the relief you need. Before you file a Chapter 7 or Chapter 13 case, it is important to understand the different types of debt. Your debt is classified as priority, secured and unsecured. Below is a brief explanation of each:
- Priority debt. Certain debt is given priority under the law, such as taxes. Typically, priority debt must be paid.
- Secured debt. A loan that has an asset pledged as collateral is considered secured debt. The two most common examples of secured debts are your mortgage and your car loans. Under these types of loan transactions, the creditor is given the right to seize the asset or foreclosure on the house if you fail to make your payments. The secured lender also typically has the authority to auction or resell the collateral to pay a portion or all of the defaulted loan.
- Unsecured debts. An unsecured debt is one that is incurred without collateral pledged to the lender. The two most common examples of unsecured debt are credit card bills and medical debt. The majority, if not all, of your unsecured debt is eliminated in a Chapter 7. You will pay a percentage of what is owed to your unsecured lenders in a Chapter 13 case. However, it is common for Chapter 13 debtors to pay pennies on the dollar owed to unsecured creditors.
If you are interested in learning more about bankruptcy and how it can benefit you, contact DeLadurantey Law Office, LLC to schedule an initial consultation.
If you are considering filing for bankruptcy protection, call DeLadurantey Law Office, LLC, at (414) 377-0518. We believe that each client should receive the individual attention necessary to reach their financial goals. Recognizing the needs of working clients, we maintain a flexible schedule and offer evening appointments. Initial consultations are always free, and phones inquiries are always welcomed.