You'll see plenty of terms when you start looking into filing for bankruptcy. Two of those terms are secured debt and unsecured debt. They're each handled differently in a Chapter 13 bankruptcy, with one taking priority over the other.

The Craig Black Law Firm knows that navigating bankruptcy terminology can be challenging. When you call my office, I answer the phone personally and work with you through each stage of your filing. If you're considering filing for Chapter 13, give me a call at 678-888-1778 or complete my confidential contact form, and I'll be in touch.

What Is Secured Debt?

Some of your debt is attached to property. Your mortgage, for instance, is secured by your home, and your car loan is secured by your vehicle. If you stop paying on the loan, the lender can collect the collateral to pay off some or all of the remaining balance.

In a Chapter 13 bankruptcy filing, you'll be set up on a repayment schedule that includes both secured and unsecured debt. The plan will ensure that you pay back the amount needed to release the lien on the collateral or, in the case of a mortgage, to make your loan payments up to date.

It's especially important to make on-time payments on your secured debts under your payment plan. Failure to do so could result in the collateral being repossessed by the creditor. This includes your home, which can be foreclosed.

What Is Unsecured Debt?

Chances are, a large chunk of your debt fits into a category known as unsecured debt. This type of debt is considered non-priority debt in Chapter 13 payment plans. Unsecured debts include:

• Personal and business credit card balances
• Medical bills
• Personal loans without attached collateral
• Overdue utility bills

Government-mandated debts like child support and student loans are technically unsecured, but some of those debts are prioritized in Chapter 13 payment plans. Like secured debts, priority debts will need to be paid in full during your repayment period. Student loans aren't priority loans, but they won't be discharged, and you'll continue to accrue interest on them throughout the next three to five years.

Cramdowns and Secured Loans

Paying off a $10,000 car loan in three to five years might seem daunting if you're deeply in debt. That's where the cramdown provision can help. Cramdowns are designed to protect both the bankruptcy petitioner and lenders during Chapter 13 proceedings.

With a cramdown, the court looks at the current market value of the asset used as collateral. The loan is then reduced to that value, and you, the borrower, are required only to pay off that amount during your repayment period. You may also have your interest rate greatly reduced for the remainder of the loan. For vehicles to qualify, you'll need to have owned the automobile for at least 910 days.

Legal Expertise in Chapter 13 Bankruptcy

While you don't need an attorney to file for Chapter 13 bankruptcy, experts recommend it. The process of filing can be complex, and you'll likely have questions along the way. It's also important to ensure your filing is accurate down to the finest detail.

The Craig Black Law Firm specializes in Chapter 13 bankruptcy and can help you navigate the process. Get in touch with us at 678-888-1778 or complete this contact form to find out how I can help you with your Chapter 13 bankruptcy filing.