If you’ve made the decision to file for bankruptcy, your first step in that direction will be filling out a lot of official paperwork that provides the details of your financial situation. As you can imagine, these forms will ask about your income, your assets, and your debts, and the information you provide will go far beyond simply how much you owe: the bankruptcy court will want to know whether a debt is secured or unsecured, and what the priority levels of unsecured claims are as well. This information is essential in helping to determine how your various debts will be addressed.

The first thing you’ll need to understand is the difference between secured and unsecured debt. A secured debt includes any debt for which an asset serves as collateral, and on which the creditor has the right to take possession of the item in response to nonpayment. These would include debts such as a vehicle loan or a mortgage, and will be listed on Schedule D. In a bankruptcy filing, these items could be repossessed or foreclosed upon, and then sold by the creditor so that they can recover their money.

Schedules E and F are reserved for unsecured claims. These claims do not have a specific piece of property or an asset offered as collateral and are generally split into two categories: priority and nonpriority. Schedule E is reserved for listing unsecured debts that represent high priority liabilities. These often include paying a child support obligation or any monies that you may owe to the federal or state government in the form of back taxes. These creditors get treated differently than nonpriority unsecured liabilities. They are put ‘first in line’ for payment and cannot be discharged. In fact, if your assets are sold, the proceeds will often be used to take care of these debts. By contrast, Schedule F on the bankruptcy paperwork is for nonpriority unsecured liabilities such as credit cards, medical bills and personal loans, which may be discharged without the creditors receiving payment.

Bankruptcy can feel overwhelming. The paperwork alone represents a significant effort. If you are uncertain as to whether bankruptcy is the right choice for you, or if you have decided to move forward but don’t know where to stop, we can help. Contact us today to set up a time to come in and chat about your situation.

 

 

$600 Premium No Fault Divorce
$600 Premium No Fault Divorce
Free Bankruptcy Evaluation Button
Free Bankruptcy Evaluation Button
Call Today Button
Call Today Button
Sign Up For Our Mailing List Button
Sign Up For Our Mailing List Button