Individuals filing for bankruptcy need to understand not all debt may be discharged with this filing. The court looks at three types of debt and determines what may be forgiven and what must be repaid. A Bankruptcy Lawyer In Puyallup Wa can be of great help in providing more information about these categories, but following is an overview of the debt categories.
Secured Debts
Secured debts are those that involve an unsatisfied lienholder. For example, a home with a mortgage is a secured asset and is at risk in bankruptcy, and the same is true of a vehicle that has not been paid for in full. However, the debt may be fully or partially secured, depending on the number of payments made on it, and some debts may appear to be secured when they are not. The attorney can be of great help in determining which debts are secured in the proceeding.
Priority Debts
Certain debts receive priority over others, such as the fees associated with the bankruptcy case and any child and spousal support. These debts must be paid before all others as the case moves forward, according to current law. Be sure to speak to an attorney and learn about priority debts that are currently owed and how they are handled in a proceeding of this type. Furthermore, be sure to ask how they are handled in Chapter 7 versus Chapter 13 bankruptcy.
Unsecured Debts
Numerous debts fall into this category, such as credit cards, medical bills, loans that are not backed by collateral, and many payday loans. In addition, certain types of secured debt may become unsecured debt depending on the circumstances. For instance, if a person voluntarily turns in a vehicle because they are unable to repay the loan, the amount owed on the vehicle at the time of surrender becomes unsecured debt. In contrast, unsecured medical bills become secured when a judgment is obtained.
Speak to a Bankruptcy Lawyer In Puyallup Wa today to learn more about secured, priority, and unsecured debts. This information is of great help in determining whether bankruptcy will be of help to the debtor and whether other options might be of more benefit. The more information a person has, the easier it becomes to determine which debt relief plan best meets his or her needs.
