Debts in Bankruptcy: Secured, Unsecured, and Hybrids
To summarize, we talked about secured debts, having collateral against them, unsecured debts, no collateral, hybrids, part unsecured, and part secured. We talked about priority unsecured, student loans, child support, and things that you cannot discharge, they’re not secured, but you still can’t get rid of them. And we talked about administrative.
So what I’m going to talk about today is, so what do you do with these things in a bankruptcy? How do you do it?
Well, in Chapter 7, which is, as I’ve said, what you want to do if you can, unsecured is gone, discharged, secured. If you’re keeping them, chances are that you want to. In some cases, if you’ve bought a car, within around the last three years, you’re going to have to, if you want to keep it, you’re going to have to pay the whole note. If it’s older than that, you can split it up and only pay the value and still keep the car. And other secured debts, your home, pretty much stuck with, some very special cases.
Other things, you can just pay the value of those items, those personal property items, other than the vehicle, and consider the rest unsecured and not pay it. And then you can go to Chapter 13, where you’re making any of that kind of payments.
So what’s a good strategy? So I’m going to mention one more is tax debt. I’ve talked about this separately before. If it’s three years or older since it was filed, treat it as normal and secured. Basically, it’s called priority and secured, but you can discharge it. If it’s less than three years since it was filed, it’s considered priority unsecured, non-dischargeable. You got to pay it.
What if you have child support, taxes, and student loans in a 13? So what are you going to do with those debts? Some debts are going to come ahead of others. Others will not. But what you want to try to do is maximize the payments on the debt, the priority unsecureds and secures that you’re going to keep, and then let the rest just be discharged at the end of Chapter 13. Because you only have so much of a pool. If you can divvy it toward things that you can’t discharge anyway, that’s the best strategy.
Now, that can be difficult because, for example, with student loans, even though they’re priority unsecured, you can’t necessarily put them above other unsecureds like you can with secured debts and certain other types of debt. However, perhaps you can set up an outside payment plan for the student loans and then subtract that from your disposable income, thus providing less and achieving the same thing.
Anyway, these are the things you hire me for to see what’s possible, what you can do. That’s not always feasible either. But these are the considerations.
So I hope this video has helped you see how we take these debts, mix them up, and maximize the benefit to you. As always, you can reach me, a debt collection lawyer in Oklahoma, at oklahomacitybankruptcyattorney.pro or at (405) 563-7888.