Understanding the Difference Between Secured, Unsecured, Priority, and Nonpriority Claims
When you file for bankruptcy, you must disclose your debts. In the bankruptcy paperwork, debts are referred to as “creditor claims,” and you must sort them into categories. Your claim first need to be sorted into secured and unsecured, then the unsecured claims should be divided into priority and nonpriority.
Do you know how to properly label your creditor claims? You can learn more in this blog post.
Secured claims include mortgages and car payments. These debts are collateralized. This means that the creditor you owe money to has a lien on a piece of property you own. A mortgage lender has the ability to foreclose on your home and a vehicle loan lender can repossess your car.
Debts are considered unsecured claims if the lender has no lien. Unsecured claims are split into two categories: priority and nonpriority.
You cannot discharge these claims. Available money must be used towards paying them off. They must be paid before nonpriority claims. This includes child support, alimony, and any money you might owe as the result of a personal injury or wrongful debt lawsuit. Some tax obligations are also considered priority claims.
Nonpriority claims are the last to be paid back. Some of them can be discharged as a part of your bankruptcy. Nonpriority claims include medical bills, personal loans, and credit card debts.
How do I file for bankruptcy?
If you are considering filing for bankruptcy or are starting the process, it is important to have the help and guidance of an experienced bankruptcy attorney. At Maxwell Dunn PLC, we handle our clients’ cases with a personal but professional touch. Our team will always put you first. We will analyze your case and identify the most favorable plan. Sometimes bankruptcy cannot be avoided, but oftentimes you have other options. We can provide resources for bankruptcy reorganization, rebuilding credit, and bankruptcy alternatives. No matter your situation, we want to hear from you. Call Maxwell Dunn PLC at (248) 220-7671 to learn more about how we can help.See all videos