It’s important for debtor or for an individual considering filing for Chapter 7 bankruptcy to know and understand which of their debts could potentially be relieved in Florida. That’s classified by two types, secured and unsecured. According to TheBankruptcySite, these two types are seen and treated differently by the bankruptcy court system.
In Chapter 7 bankruptcies, unsecured debts are generally seen as dischargeable. Therefore, they may be forgiven after the completion of the bankruptcy process. Examples of unsecured debts are such as membership fees to a gym service fees, most credit card debt if they do not have a security agreement, rent, utility bills, and medical bills or expenses. Unsecured student loans are generally not dischargeable in bankruptcy, with some exceptions your attorney can evaluate on a case by case basis.
On the other hand, secured debts, which are sometimes referred to those with collateral are not dischargeable through bankruptcy if you keep the collateral. According to Nolo, a creditor may always seek payment for such debt unless you surrender the collateral during or prior to the bankruptcy filing.
Some examples of secured loans are mortgages, home equity loans, auto loans, and any store charges that have security agreements. If you want to keep the collateral, you would be required to “reaffirm” the loan – file an agreement with the Bankruptcy Court promising to pay the loan as if you had never filed bankruptcy. Personal loans to finance companies, where a person pledged collateral such as their TV, stereo or such to secure the loan, may be discharged in bankruptcy if the debtor files a motion to avoid the lien.
Tax debts for income taxes that became due and payable less than three years prior to the bankruptcy filing are considered priority debts and are not dischargeable. Also, nondischargeable are debts for employment taxes or sales taxes. The good news is that often taxes that came due more than three years prior to the bankruptcy filing may be dischargeable. Make sure you ask your bankruptcy lawyer how to discharge those debts.
