What You Should Know About Types Of Debt In Bankruptcy Cases
There are many different types of debt in bankruptcy cases, and it can be difficult to keep track of all of the terms used and how they relate to one another. When you are considering the possibility of bankruptcy or are researching different types of bankruptcy filings, you are likely to come across a range of information about dischargeable versus non-dischargeable debts, secured versus unsecured debts, and priority versus non priority debts. These different terms are critical to understand for individual and business bankruptcy cases alike. Depending upon the type of debt, the U.S. Bankruptcy Code will require it to be handled in a specific way in a given bankruptcy case. Our West Palm Beach bankruptcy lawyers can explain what these terms mean and how they may apply to your bankruptcy case.
Dischargeable Debts Versus Non-Dischargeable Debts
The difference between a dischargeable and a non-dischargeable debt is a critical one in bankruptcy cases. In short, a debt that is dischargeable can be discharged through the bankruptcy case, while a non-dischargeable debt cannot be discharged. If you only have non-dischargeable debts, or if the bulk of your debt is nondischargeable, you will likely want to explore other options for handling your debt with assistance from a lawyer. Only certain types of debt are non-dischargeable, such as child support payments owed and particular tax debts.
Secured Versus Unsecured Debts
As you may know, secured debt is property for which there is collateral, and unsecured debt has no collateral. What is the difference between secured and unsecured debt when it comes to a bankruptcy case in South Florida? Secured debt is typically paid before unsecured debt in a bankruptcy case. More specifically in a Chapter 13 case, secured debt must be repaid in full as part of the terms of the repayment plan, while certain unsecured debt does not necessarily need to be repaid in full and may be discharged in part at the end of the bankruptcy case.
Priority Versus Non Priority Debts
The terms priority and nonpriority debts are typically used to describe the order in which certain types of unsecured debt are repaid in bankruptcy cases. Like we mentioned above, secured debt takes priority in a sense over unsecured debt. Once secured debt is accounted for, unsecured debt is divided into priority unsecured debt and nonpriority unsecured debt. Priority unsecured debt includes debts like family support and some types of tax debt. If you are filing for Chapter 13 bankruptcy, priority unsecured debt must be repaid in full.
Nonpriority unsecured debt includes most types of unsecured debt that a consumer is likely to have in a bankruptcy case. For example, medical debt, credit card debt, and personal loan debt are all likely to be classified as nonpriority unsecured debt, can be eligible for discharge, and the creditor is not required to be repaid.
Contact a West Palm Beach Bankruptcy Attorney Today
Do you have questions about types of debt and how they will be handled in a bankruptcy case in South Florida? One of the experienced West Palm Beach bankruptcy attorneys at our firm can evaluate your case for you today and can provide you with more information about how your debts will be treated in the specific type of bankruptcy case you are planning to file. Do not hesitate to contact the lawyers at Kelley, Fulton, Kaplan & Eller to learn more.