There are many difficult things about bankruptcy. Categorizing your debts should not be one of them. Here are some quick rules of thumb in knowing just what category your debts fit into. The three categories for debt are Secured debt, Unsecured debt and Priority debt.
Secured debt consists of any debt to which there is collateral associated. For example your mortgage is secured by your house; your auto loan is secured by your vehicle. This is the debt in a Chapter 7 bankruptcy for which you need to decide whether you are giving up the property in order to get a discharge or reaffirming the property, in which case you will be repaying the debt and keeping the property. An important rule to remember is that secured debt stays secured until there is a sale of the property.
What some pe0ple don’t know is that items purchased with credit cards that are specific to the store actually secure that debt and are called Purchase Money Security Interests. This would be like if you purchased a couch on the store’s credit card.
The other type of debt is unsecured and includes medical bills, credit card debt (not including purchase money situations as stated before.), signature loans, etc. These are the types of debt that will be discharged in Chapter 7.
Priority debt would be your tax debt, Child support, alimony, etc. This is debt that you will have to pay back. There are certain narrow exceptions to this which you should ask your attorney about but, basic rule thumb is, you are on the hook.