Classifying your Debt for Bankruptcy

: Chris Lee Law Firm

  Filed under: Debt

classify your debt

When filing for bankruptcy, you will need to know how to classify your debt. Each category is treated differently in bankruptcy. When you send your monthly payment to the trustee in your Chapter 13 bankruptcy case, the money will be distributed to priority, secured, and if any is left to your nonpriority debt.

Priority Debt

Priority debts are unsecured debts that are important enough to be put at the top of the list for bankruptcy repayments. Some priority debt includes:

  • Alimony
  • Child support
  • Wages and salaries owed by an employer
  • Contributions to an employees benefit plan
  • Taxes
  • Customs and penalties due to government agencies

Secured Debt

Secured debt usually has a property attached to it, such as a car or home. Most secured debts start when you sign loan paperwork giving a creditor security interest in the property while you are making the payments.
Secured debts include:

  • Loans for cars, motorcycles, RVs
  • Mortgages
  • Second mortgages, home equity loans
  • Personal bank loans
  • Store charges for security claims
  • Liens

Unsecured Nonpriority Debt

Nonpriority unsecured debt are debts that have low priority in the order of paying back your debt. The courts deem it more important to pay your priority debt like child support and secure debt so you can keep your home. Some nonpriority unsecured debt includes:

  • Credit card purchases and cash advances
  • Back rent
  • Certain taxes
  • Student loans
  • Medical bills
  • Utility bills
  • Personal loans
  • Health club dues
  • Union dues
  • Church or synagogue dues
  • Lawyers and accountants bills

If you are considering filing bankruptcy and need help determining what debt would be regarded as a priority and what debt you will need to pay, contact a Fort Worth bankruptcy attorney today.


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