Understanding the Different Categories of Debt
Video Transcribed: Good afternoon everybody, Edward Kelly, your Oklahoma bankruptcy attorney here with a new series called How do different types of debt get treated in bankruptcy? So today we’re going to provide an overview. So what types of debt are there before I can answer that question? Well, primarily unsecured debts, secured debts, priority unsecured debts, and administrative debts.
So, we’re going to talk about some different categories within those. So, secured, what does that mean? Has collateral, your car note, and secured debt. Secured to the extent of the value of the collateral. So if you owe $50,000 on your car and your car is worth $10,000, how much of that is secured? $10,000. How much is unsecured? $40,000. Your credit card has no collateral of any kind. How much of that is secured? Zero. How much is unsecured? All of it.
Priority, well what does that mean? Well, the big one is student loans. Those are priority unsecured. There’s other governmentals, child support, things like that in there. Those are treated differently. As you probably know, student loans, if they’re the federally backed kind, are priority unsecured. Can be paid, but will not be discharged in bankruptcy. Same with child support. It’s not that you can’t put these things in, and sometimes you have to put them in, and we’ll talk about that. But they will not be discharged if they’re in Chapter 7, they’re not going to be discharged, and in a 13, whatever the balance is remaining that might normally get discharged, will not be. Those are those priorities unsecured.
In administrative, the trustee gets paid, I get paid, and those go in there as well. Those are a minuscule portion, that’s probably the last I’ll mention. So we’re going to talk about unsecured debts. We’re going to talk about secured debts. We’re going to talk about combos, hybrids of those two. And we’re going to talk about priority unsecured.
So this is video one in our series, What Kinds of Debt Are There and What Can I Do With Them in a Bankruptcy? As always, you can reach me, a debt lawyer in OKC, at oklahomacitybankruptcyattorney.pro or at (405) 563-7888.