When declaring bankruptcy, the case ahead can be complex. In part, this is due to the types of debt involved in these cases. This, along with whether you file Chapter 7 or Chapter 13 bankruptcy, can have a significant impact on how a case proceeds. If you are preparing for bankruptcy, here is how specific debt types are categorized and treated in these cases, along with why you should consult Brighton Beach bankruptcy lawyers to achieve the best results.
Secured Debt
This debt, which includes mortgages, car loans, and real estate taxes, is handled differently in Chapter 7 and Chapter 13 filings. In Chapter 7, you can agree to continue making payments as scheduled, or surrender the property to the creditor and have remaining debt discharged through bankruptcy. In Chapter 13, payments are spread out over the course of the bankruptcy plan, allowing you to avoid foreclosure or repossession. However, once the Chapter 13 plan expires, you must resume normal payments. Therefore, always consult a bankruptcy attorney in Brooklyn for advice on these matters.
Unsecured Debt
Divided into priority and non-priority, these are handled differently as well in Chapter 7 and 13 filings. Priority debt, including child support, taxes, and criminal fines, must be paid in 3-5 years through Chapter 13. In Chapter 7, any assets you have must be sold to pay these debts. Non-priority debt, such as medical bills and credit card debt, are usually completely discharged in both Chapter 7 and 13 filings, or at worst you pay only a small fraction of the total debt.
Student Loans
Considered non-priority unsecured debt, student loans have special rules applying to them, and generally are not discharged through bankruptcy filings.
If you anticipate filing for bankruptcy, schedule a consultation with Brooklyn bankruptcy attorneys at the Ursulova Law Offices as soon as possible to determine the best course of action.
