Behm Law Group, Bankruptcy Attorneys

In most cases of consumer bankruptcy, the debts accumulated will be partially made up of unsecured debts. Whether this means the filer has a large amount of credit card debt or simply a significant amount of personal loans, if you’re struggling with your debts, unsecured or otherwise, bankruptcy might be the right option for you. Behm Law Group, Ltd. can help you understand how your unsecured and secured debts are treated differently when you file for bankruptcy in Windom, MN.

Unsecured debts are treated differently in both Chapter 7 bankruptcy and Chapter 13 bankruptcy. The type of bankruptcy case you file under will decide the outcome of how unsecured debts change the way your bankruptcy case is handled.

What is Unsecured Debt?

There are many kinds of debt that fall into the category of unsecured debt. The most common of these is credit card debt, but several other types of debt many people encounter in life are also considered unsecured. The fundamental definition of unsecured debt is any debt that doesn’t use a tangible property as collateral. Any debt that involves a property, such as a home or a motor vehicle, is considered secured debt and is treated differently in both Chapter 7 and Chapter 13 cases.

Some other examples of unsecured debt include:

• student loans
• utility bill debts
• income tax debts
• personal loans not involving property
• medical bills
• pending court judgments
• and, of course, credit debts in all forms

How are Unsecured Debts Treated?

In a Chapter 7 case, your unsecured debts will most likely be entirely discharged. There are, however, exceptions to this. For example, student loans are not subject to the general discharge granted in Chapter 7 or Chapter 13 cases.  In order to get student loans discharged, one must start an actual lawsuit against the student loan creditors and ask the bankruptcy court to specifically discharge the student loans. In a Chapter 13 case, the way your unsecured debts are paid in your chapter 13 repayment plan and how much of those debts are paid depends on the amount of disposable income you have.

If you’re considering bankruptcy because of your accumulated unsecured debts, contact Behm Law Group, Ltd. for legal advice and assistance. For more information about filing for bankruptcy in Windom, MN, contact us today at (507) 387-7200.