For the purpose of bankruptcy, the debt classifications you have will help determine the type of bankruptcy you file. Most consumer debt is either secured or unsecured. Secured debt uses collateral such as your home for a mortgage or your vehicle with a car loan. Most unsecured debt is from credit cards, medical debt, and personal loans.
Chapter 7 bankruptcy is best suited for those with predominantly unsecured debt. If you make at or below your state’s median income, you could have all of your qualifying debt eliminated in as little as three to six months.
If you are behind in your secured debt and would like to keep your property, Chapter 13 may be a better choice. For this type of bankruptcy, you are allowed to keep all of your assets and make a court-approved repayment plan over a three to five-year.
At the end of your successful bankruptcy case, your leftover unsecured debt will be eliminated. Some unsecured debt will not be discharged in either chapter 7 or chapter 13; this includes child support, alimony, some taxes, and student loans.
The type of debt you have, your income and expenses will help determine what kind of bankruptcy would best serve your needs. Speaking to a Plano bankruptcy attorney can give you the information you need to get financial relief.