When you file for bankruptcy, the court will be interested in the kind of debt you have. If you have a lot of unsecured debt, you may want to file Chapter 7, or liquidation bankruptcy to have those debts discharged. If on the other hand, you have a home and vehicle you would like to keep, and you might want to consider a Chapter 11, or reorganization bankruptcy.
Two Basic Types of Debt
Almost all consumer debt can be either unsecured or secured. Unsecured debt includes credit cards, personal loans, medical bills, student loans, and unpaid taxes. Secured debt is backed by collateral such as a home or vehicle.
Credit card debt makes up approximately 40% of all consumer debt in the United States. Many Americans owe a huge portion of their overall household debt to credit cards. When you fall behind in these payments you will start receiving phone calls, and mail demanding payments. Unsecured lenders can also take you to court to sue you to demand you bring your accounts current. Sometimes these lenders are awarded the right to attach liens to your personal property or your home to enforce payment of the debt. While the court ordered child support and alimony are also unsecured debt they carry stiff penalties for not making these payments.
Your secured debt will almost always be your first priority when paying your bills. If you fall too far behind you may lose your most valuable possessions. The lender has the right to take back the collateral if you stop making the payments. Secured lenders are less likely to agree to debt settlements if you fall behind in payments since they are legally able to seize your home or vehicle and sell them to pay off your loan. Sometimes if the property is sold at a price below what you owe, you may still be responsible for the balance.
If you are falling behind in your payments and don’t see how you could possibly catch up, or risk losing your home and your car, contact a Rio Grande bankruptcy attorney to discuss what options you may have.