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debtThe United States is a notoriously consumeristic society. Having good credit is a necessity to buy a home and a reliable vehicle. Credit must be built, often through the usage of credit cards and the ability to repay the credit card debt. Sometimes, however, we accumulate debt and get in too far over our heads. Other times, a major unforeseen life event occurs—one which we are unprepared to handle financially. When this happens, filing for bankruptcy may help struggling individuals and families. When considering bankruptcy, the first question on many minds is, “Will it get rid of all of my personal debts”?

Understanding Bankruptcy

Bankruptcy is a federally approved process through which an individual or a company can reduce their debt. Those who are authorized for the process may have debts written off or repaid under a new agreement. The method used depends directly on the type of bankruptcy approved. The most typical forms of the process are Chapter 11 for businesses or Chapter 7 or Chapter 13 for private consumers, although others are available under appropriate circumstances. These chapters refer to the specific section of the United States Bankruptcy Code that will apply in a given case. Meanwhile, while the process is underway, all collection activities related to your debts—including lawsuits and foreclosure proceedings must stop.

Will All Debts Be Cleared?

If you are wondering whether bankruptcy resets your credit, enabling you to begin as though the debt never occurred, the answer is “no.” Filing for bankruptcy allows those who meet eligibility requirements to rid themselves of some but not all debt. Financial obligations that do not typically qualify to be wiped clean are child support, alimony, taxes, student loans, and secured debt. Although they may not be totally discharged, some may be eligible for a restructured payment plan. Some of the most common discharged liabilities include:

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bankruptcyFor most people in the United States, owning a vehicle is a necessity that allows them to get to work, go to school or even just go about their daily lives. Because of this, those who are struggling to make car payments or who are aiming to file for bankruptcy tend to be worried about whether or not they can keep their vehicle. For most people, keeping your vehicle after a Texas bankruptcy is entirely possible, though it depends on whether or not you are still making payments on your car and what type of bankruptcy you file.

Understanding Secured Debt

The first thing you should understand is that your car loan is a secured debt, which is unlike other types of debt such as credit card debt. A secured debt is one that is backed by physical property used as collateral, such as a vehicle. If you stop paying on your secured debt, your lender has the right to repossess your property.

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Posted on in Bankruptcy Law

Bankruptcy is about debts. Different categories of debts are treated differently. The categories are secured, priority and general unsecured.


Your debts are the reason you are reading this. You want to know how bankruptcy would deal with your debts.

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The 910-day & 1-year conditions for doing a Chapter 13 cramdown don’t apply if the creditor doesn’t have a purchase money security interest.

The Cramdown Advantage

Last week we got into Chapter 13 cramdown of vehicle loans and furniture loans. Cramdown can be an excellent way to keep personal property that’s securing a loan. It allows you usually to reduce the monthly payment as well as the total you pay on the debt. Often the reductions are significant. Cramdown can enable you to keep a vehicle or some other important personal property that you couldn’t otherwise. It can be a reason to file a Chapter 13 case because it isn’t available under Chapter 7 “straight bankruptcy.”

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Posted on in Bankruptcy Advice

Your debts are either secured by something you own, or they are unsecured. Unsecured debts are either “priority” or “general unsecured.”


Unsecured Debts

Debts that are unsecured are those which are not legally tied to anything you own. The creditor has no “security” attached to the debt, no “security interest” in anything. It has no right to repossess or seize anything of yours if you don’t pay the debt. It can only pursue the debt itself.

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