If a debt is discharged in bankruptcy the borrower (debtor) will be released from all personal liability on the debt. Further, the bankruptcy discharge prohibits a creditor from taking any collection action against the borrower. In most cases, obtaining a discharge will be the primary reason why a borrower files for bankruptcy. However, there are many types of debts that cannot be discharged in bankruptcy. Therefore, it is important to seek the advice and counsel of a bankruptcy attorney in Tampa when pursuing relief from Chapter 7 or Chapter 13. A bankruptcy law firm in Tampa can help advise on the debts that cannot be discharged in bankruptcy and help you get a fresh start with a successful Chapter 7 or Chapter 13.
Secured Debts that Cannot be Discharged in Bankruptcy:
Debt is categorized into two types: secured and unsecured. First, think of secured debt as something tangible (i.e., a home or a car). A secured creditor is one who has a specific piece of collateral securing debt. That creditor may be able to take that collateral back once you file bankruptcy in order to get paid. In Chapter 7 and 13, the value of a secured debt on personal property is determined by the replacement value of that piece of property as of the date you file your bankruptcy petition. See bankruptcy law 11 U.S.C. 506(a)(2). Secured debts may be discharged in bankruptcy but it is likely a lien will remain on the collateral securing the loan.
Additionally, secured debt/creditors have first priority in being paid back through your bankruptcy estate over other creditors, but they are not known as “priority secured creditors” because no such title exists. The term “priority” only applies to unsecured debt, as discussed below. For more information on the priority of a specific debt contact a bankruptcy lawyer in your area.
Unsecured Debts that Cannot be Discharged in Bankruptcy:
Unsecured debts are loans that do not have collateral which can be physically taken away from you and sold (such as credit card debt, medical bills, student loans, alimony, child support, etc.). Additionally, there are two forms of unsecured debt: priority and general (also known as “nonpriority”).
Priority unsecured debts are ones that the Bankruptcy Code gives special protection to; they will be paid first among all the other unsecured creditors (but they do not have priority over secured debt/creditors). See bankruptcy law 11 U.S.C. § 507. Examples of priority unsecured debt are child support and alimony, administrative expenses (such as taxes and fines), governmental claims (such as income tax for at least three filings, property tax for the last year, and employment tax for the past three years), FDIC claims, and property claims. Typically, priority unsecured debts will not be discharged in bankruptcy. Conversely, most nonpriority unsecured debts are eligible for a discharge in Chapter 7 or Chapter 13.
NonPriority Unsecured Debts in Bankruptcy
General (or “nonpriority”) unsecured debt are ones that will likely not get paid anything over the course of your bankruptcy and will ultimately be discharged (unless if it is one of the nondischargeable, general unsecured debts, such as student loans). Properly classifying debts can be complicated, if you need assistance contact a bankruptcy attorney for help.
Bankruptcy Law Firm in the Tampa Bay Area
If you are having a difficult time meeting your financial obligations Florida Law Advisers, P.A. may be able to help. We are a customer service oriented Tampa bankruptcy law firm, committed to providing personalized attention and dedicated legal counsel. All of our initial consultations are free and convenient payment plans are always available. Regardless, if you need help with Chapter 13, Chapter 7, or other debt relief our professional legal team will provide you with competent legal advice you can trust. Call us now at 800 990 7763 to speak with a Tampa bankruptcy lawyer.