Classifying your debt to determine what category they fall into will help you, and your bankruptcy lawyer determine which type of bankruptcy will suit your needs the best.
Secured debt is tied to a specific property. If you have a mortgage, the house will be the collateral. Your car will be the collateral in a vehicle loan. Also falling into this category could be:
- Home equity loans (second mortgages)
- Boat, motorcycle or RV loans
- Judicial liens, if someone successfully sues you creating a lien on your home or personal property
- Store charge cards with agreements to retain a security interest in all hard goods sold
- Personal loans that you used the property as collateral
- Tax liens, or statutory liens (for contractors or mechanics if you don’ t pay for services)
This category includes all debt that is not secured or priority debt such as alimony or child support. Some unsecured debt includes:
- Credit cards, store cards, gasoline cards
- Back rent
- Student loans
- Medical bills
- Some tax debt
- Utility bills
- Health club dues
- Union dues
- Lawyers or accountant bills
Priority debts are unsecured debt that has an importance during the bankruptcy process.
Some of these debts are:
- Child support
- Wages and salaries
- Contributions to employees benefit plans
- Current taxes
- Fees or penalties you owe to the federal, state or local government
If you have a large amount of secured debt and you would like to keep the home you are buying you may want to consider Chapter 13. However, if you are current in your home mortgage and have a large amount of unsecured debt, Chapter 7 may be the best option for you.
Speaking to a Rio Grande bankruptcy attorney will help you clear up any confusion about what type of bankruptcy will suit your needs the most.