Filing for Bankruptcy in Salt Lake City

Understanding the Different Types of Debt

There are two ways to think of the different types of debts. The first is whether they are dischargeable or non-dischargeable debts. Section 523 of the United States Bankruptcy has an enumerated list of debts that are not dischargeable. The most common types of nondischargeable debts are student loans, some taxes, child support and alimony. While section 523 lists other debts that are nondischargeable, very few people have those kinds of debts. We will discuss your debts with you during your free consultation.

The second way to think of types of debts relates to how those debts are treated in a bankruptcy. There are secured debts, priority debts, and unsecured debts. Each chapter treats these types of debts differently.

Before you file for bankruptcy to get your debt forgiven or discharged, it is important to understand what to expect. At Enderton & Mathews, LLC, we want to help protect you from being disappointed by the type of debt you can or cannot discharge.

Types of debt

Chapter 7

Chapter 13

Secured

With secured debt, you either reaffirm, surrender, or redeem.

In a chapter 13, you can choose to either pay the debt direct, pay it in the bankruptcy, or surrender the property.

Priority

Priority debts are generally non-dischargeable.

Priority debts are paid at 100% with no interest rate.

Unsecured

Unsecured debts are discharged unless there is cause for them to be nondischargeable pursuant to section 523.

Unsecured debt is generally discharged. Occasionally, the bankruptcy code requires that some percentage has to be paid to unsecured creditors.

WE CAN HELP YOU TO UNDERSTAND WHAT WILL HAPPEN IF YOU FILE FOR THE FOLLOWING TYPES OF DEBT:

CREDIT CARD, MEDICAL DEBT & PERSONAL LOANS

There is one reality that exists about creditors. They are allowed to lie to you as long as the lie does not violate the Fair Debt Collections Act. Collectors often tell people that they have no choice but to pay because credit card and medical debts are not dischargeable in bankruptcy. That is absolutely false. Credit card debt, medical debt, and personal loans are unsecured generally discharged in bankruptcy. Also, there are many other types of unsecured debts that are discharged in bankruptcy.

STUDENT LOANS & TAX DEBT

One of the most difficult types of loans to discharge are student loans. To successfully discharge student loans, you will need to prove that you are permanently under undue hardship that makes it impossible to make a student loan payment. It is extremely rare for the courts to allow a discharge of student loan debts. Your loan payments may be reduced while you are in a bankruptcy.

Debts which are owed to the government, such as tax debt, sometimes nondischargeable The types of taxes that are not discharged in a bankruptcy include, business taxes that follow officers and directors, taxes that are less than three years old, and tax obligations based on late filed tax returns. We can help you determine the dischargeability of your tax debts.

VEHICLE LOANS

Many debtors worry about what will happen to their vehicle if they file bankruptcy since driving is often a necessary part of daily life. The answer is it depends.

If the debtor does not want to keep the car, he or she can surrender it to the creditor. Surrendering the vehicle wipes out any debt remaining on the loan.

If the debtor wants to keep the vehicle, whether he or she is able to do so depends on whether the he or she has fallen behind on loan payments. If the debtor is not behind on payments, and the owner wants to keep the vehicle, he or she may reaffirm the current loan or redeem the car by paying the creditor the current market value of the vehicle in a lump sum.

If the debtor is behind on payments, whether he or she is able to keep the car often depends on what Chapter the bankruptcy was filed under. Chapter 7 does not provide a way for filers to catch up on payments, so typically cars with back due payments must be surrendered. Chapter 13, however, allows filers to make up back due payments, so keeping the car is possible.

SPEAK WITH A CENTRALLY LOCATED SALT LAKE CITY BANKRUPTCY ATTORNEY

When you choose to file for bankruptcy, it is important that you understand each different type of debt. The particular chapter of bankruptcy you file for will determine which type of debt is dischargeable. Our Salt Lake City bankruptcy lawyers have more than 30 years of combined experience, and we can work with you to manage your expectations. We can help you to understand which debts are dischargeable and which must be repaid in the future.

CALL US NOW AT TO START WITH A FREE CONSULTATION.

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