What Is Unsecured Debt?

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In bankruptcy we primarily concern ourselves with a type of debt as opposed to maybe how much you have of a particular kind. So real common example of unsecure debts in bankruptcy are gonna be your credit cards, lines of credit, medical debts, pay day loans, a lot of times it’s pretty rare you don’t see some type of utility on their whether it’s a power bill or even cell phone bills because they charge so much when you have to cancel service or service gets cancelled. That’s, you know, in broad strokes, unsecured creditors. Your secured creditors, on the other hand, are going to be debts that are secured by a particular type of a property. So, you know, most all of us have financed a car at some point in our life. That car note is secured by the car just means that if you have ever cease to make the payment on the note that the lender’s recourse is to come back and take the property sell that to try to recoup some of their loss but then they also have a advantage of being able to come after you for any balance that’s leftover. Car notes are real common, mortgages, same sort of situation, where you have a mortgage note but then you have that note secured by the house that it was used to purchase with generally.

Now in 13 we also have other categories of debts. We have what we call administrative costs. That’s just what the chapter 13 trustee is going to get paid for administering the case. As well as attorney’s fees in some cases if you build it in that way and various other administrative things. And then we also have what’s called priority creditors. That gets a little complicated at a certain point but essentially it’s a certain type of debt that just for public policy reasons we’ve determined should be paid back in full.

So if you are in a 13 and say you had a rather recent tax debts and there is quite a few qualification in their own what does or doesn’t make a tax debt recent but if it was you know within the last three years the odds are very likely it’s going to be a priority debt. So, in a 13 that part of debt may have to be paid back in full. Another real common debt that has to be paid back in for in a 13 would if you are filing a 13 to save your house from foreclosure. That, unfortunately, is been a lot of what we have done over the last 4 or 5 years. And really up into last year primarily, because of the housing crises and all the foreclosures that were going on shockingly here in the last year, a lot of the bankruptcies we filed to stop foreclosures are because loan modification companies haven’t quite delivered the way they promised to. Often times we have those cases coming in within 24 or 48 hours of a foreclosure sale and need to get them filed quickly because, of course, you have to file before the sale to stop the sale. When you are filling in that capacity the arrears on the mortgage, the payments that were missed or not made, those are paid back in full to save the house. But, unlike in a regular foreclosure procedure outside of bankruptcy where you’d have to bring it all to the table maybe 10,000 or 15,000 or more dollars in one lump sum, you are able to spread that out over up to 60 months in a chapter 13 so you are not getting hit by all at one time.

To continue reading the answers, see the text below or jump to another question using the links below:

  1. How Do You Know If You Qualify For A Bankruptcy?
  2. What Is Unsecured Debt?
  3. What Is The Process Of Bankruptcy Like?
  4. Can A Chapter 13 Be Converted To A Chapter 7?
  5. What Is the Process Of Bankruptcy Like – Part 2
  6. When Is The Best Time To File?
  7. How Can I Rebuild Credit After A Chapter 13?
  8. Can A Chapter 13 Be Amended?
  9. Can Filing Bankruptcy Prevent An Increase In Out Of Court Settlement?
  10. Is There Any Way To File Bankruptcy And Keep My Car Or My House?
  11. Will People From The Bankruptcy Court Send Someone To My House To Look At My Stuff?

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