If you are struggling under a mountain of debt, you may be wondering how to extricate yourself from under the crushing weight. You may be wondering if there is a way to make some order out of the seeming chaos, whether there are certain debts that should take priority. The short answer is “yes.” The long answer involves the option of Chapter 7 Texas bankruptcy.
Unsecured Debts and Bankruptcy
A major point to drive home is the difference between secured and unsecured debts. Secured debts are debts that have a piece of property “securing” them, such as a house or a car; something, in other words, that can be taken away if the debt is not being repaid. Secured debts should always take precedence when you are deciding which debts to repay prior to entering Texas bankruptcy. Secured debts are not always dischargeable, and there is always some likelihood that the piece of security will be taken from you if you do not pay back the debt.
Unsecured debts, on the other hand, are debts that have no material item securing them for the creditor. These include credit card debts and medical debts, the two main types of unsecured debt. In Chapter 7 bankruptcy, unsecured debts are almost always able to be fully discharged, freeing you from all responsibility to make further payments. Therefore, if you are considering Texas bankruptcy, it is advisable to prioritize your secured debts at the expense of unsecured debts, which stand a good chance of being wiped out when your Chapter 7 discharge occurs.