The bankruptcy trustee pays priority debts in complete before having to pay debts that are nonpriority.
Whenever you complete your bankruptcy documents, you’ll list the money you owe in accordance with kind. You’ll start with isolating your financial situation into two groups: secured debts guaranteed in full by collateral and unsecured financial obligation. Bankruptcy law further divides unsecured debt into two additional groups: concern debts being eligible to be compensated first, and nonpriority debts.
In this specific article, you’ll learn the differences when considering concern and debts that are nonpriority and exactly why it matters in Chapter 7 and Chapter 13 bankruptcy.
If you already fully know the debt is unsecured, skip this area. If you’re uncertain, the factor that defines guaranteed from personal debt is it: Collateral or property guarantees the repayment of secured debt, although not a credit card debt.
You are able to find out yourself these two questions whether you have a secured or unsecured debt by asking:
- Does your agreement permit the loan provider to simply take your home in the event that you neglect to pay as agreed?
- You be forced to pay the debt out of sales proceeds before transferring the title to someone else if you sold the property, would? […]