Search articles:
Schedule an appointment

What are Unsecured Debts in Bankrutpcy?

understanding unsecured debts

Understanding Unsecured Debts in a Bankruptcy

When filing a bankruptcy petition, whether it’s a chapter 7 or chapter 13 bankruptcies, it is most important that you understand the difference between secured and unsecured debt.

Bankruptcy laws treats the type of debt differently,. In other words whether a debt can be discharged or not may depend on whether it is secured or unsecured.

With an unsecured debts there is no property given as a security when buying the property whereas for a secured debt there are specific items that are attached to the debt. 

Common examples of unsecured debts are credit cards, hospital and medical bills, store cards and personal loans.  In these purchases, you do not have to put up any property as security for the debt.  Contrary, secured debts, such as mortgages and car payments have specific property attached to it.

Unsecured debt arises via a contract between you and a creditor but is  not tied to a security agreement. It does not permit the creditor the same remedies available to a secured creditor. A debtor simply promises to pay back the money borrowed from an unsecured creditor.

 

Unsecured debt is discharged in a bankruptcy.

 

Types of Bankruptcy and the Unsecured Debt

In a Chapter 13 bankruptcy the debtor is able to lower the balance of unsecured debts and eliminate added fees and interest charges to make them less expensive to pay off.  In may cases the unsecured creditor only receives pennies on the dollar.

In a Chapter 7 bankruptcy most  unsecured debts are  completely  liquidated  and then discharged.

Debts that are discharged through bankruptcy do not disappear from a debtor's credit report until the reporting period expires. Each debt included in a bankruptcy will be noted on the credit report.

 

Some Debts not discharged

There are some unsecured debts, such as child support you owe and most tax debts, cannot be discharged through bankruptcy unless the debtor meets rigorous hardship requirements


Articles related to this topic

  • What is Bankruptcy All About?
  • Things Everyone Should Think About Before Filing Bankruptcy
  • An Overview of Chapter 7 Bankruptcy for New York and New Jersey
  • New Jersey Chapter 13 Bankrutpcy
  • New York Chapter 13 Bankrutpcy
  • Before You File for Personal Bankruptcy: Information About the Required Credit Counseling and Debtor Education
  • List of Approved Bankruptcy Credit Counseling Agencies
  • List of Approved Bankruptcy Providers of Personal Financial Management Instructional Courses
  • National Standards for bankrutpcy: Food, Clothing and Other Items
  • What are Unsecured Debts in Bankruptcy?
  • What are Unsecured Debts in Bankruptcy?
  • How to Access Your Chapter 13 Case Information on the Internet
  • FAQ - How to Access your Chapter 13 information on the Intenet
  • Debts Not Discharged in Chapter 7 Bankruptcy
  • When a Discharge is not granted in Chapter 13 Bankruptcy
  • FAQ- The Discharge in Bankruptcy
  • How You Receive Protection From Creditors in a Bankruptcy Case
  • HOW THE AUTOMATIC STAY IN A BANKRUPTCY CASE WILL PROTECT YOU AND YOUR CO-DEBTORS
  • New Jersey Federal Bankruptcy Exemptions
  • New York Bankruptcy Exemptions- Two Choices Available for New Yorkers
  • Understanding the Means Test and Median Income Level Under New Bankruptcy Laws for Chapter 7 and Xhapter 13
  • Mortgage Forgiveness Debt Relief Act stope Home Loan Foreclosure Tax Nightmare uisng IRS Form 982
  • Bankruptcy Terminology Explained
  • How to Get Credit after filing bankruptcy. Rebuilding and keeping credit forever.
  • How to Repair Your Credit After Bankruptcy
  • Credit Card Calculator - See how much you are really spending for the credit you use.

  • Videos related
    Author
    Moses Apsan and his staff, based in New York City and Newark, NJ provide exceptional legal services throughout the world, in all aspects of immigration to the United States, including non-immigrant (temporary visas), immigrant visa (Green Card) and deportation defense. In addition Mr. Apsan, has been practicing Bankruptcy law and Divorce laws for over 30 years, He was the President of the Federal Bar Association, New Jersey Chapter (1997-2002). He speaks Portuguese and Spanish..
    Click-to-Call us

    Use our automated
    Click-to-call to contact Apsan Law Offices, LLC. or
    call directly at
    1(877) 873-8510

    Click to call immigration lawyers


    nj immigration lawyers
    Free Consultation