Let’s start with secured debt. Debt that is secured generally means that you pledge an asset to assure the payment of the loan.
The most common examples are car loans and mortgage loans. If you don’t pay your car loan, the lender will repossess the car. If you don’t pay your mortgage loan, the lender will foreclose and take the property back.
There are other types of secured loans, but these are not as common Sometimes a bank will hold stock, certificate of deposits, or other valuables to secure the payment of a loan.
But for purposes of filing your case, car and mortgage payments are the most common secured payments.
If you are going to file, then you need to make payments on items that you want to keep. But if you are going to surrender homes or vehicles, then there is probably no need to make those payments.
When behind on payments on a home that you want to keep, your lender might not accept payments unless you can cure all past due payments at once. If this is the case, you need to speak to me regarding a chapter 13 to catch up back due payments.
Also in a chapter 13, if you have a second mortgage or equity line, I may be able to eliminate this debt. But do not stop paying on a current mortgage until you have discussed your options with me.
Next is unsecured debt. The most common forms of unsecured debt are credit card bills, medical bills, personal loans (that do not have a security interest – no pledge of any collateral), payday loans, student loans, and tax debt.
As to student loans and tax debt, please do not confuse unsecured debt with dischargeable debt. Some debts are most likely dischargeable in bankruptcy – like credit cards. But some debts are unsecured and at the same time not dischargeable in most cases – like student loans and tax debt.
If you are going to be filing, then there is no reason at all to pay on your dischargeable, unsecured debts – meaning credit cards, medical bills, and personal loans.
Be careful about incurring any further debt if you are thinking of filing bankruptcy.
- Some credit card purchases can be considered “fraudulent” if charged within a certain period of time before filing
- Be careful to not take out new loans prior to filing a bankruptcy.
- Do not take out cash advances before filing a bankruptcy.
All of these should be discussed with an attorney in contemplation of filing a bankruptcy.
Call 407-749-0080 now for a free consultation to see how I may be able to help you.