Bankruptcy and Unsecured Debt
When filing for Chapter 7 foreclosure, you will have to identify both your secured and unsecured debts.
The purpose is so that the bankruptcy trustee can inform the judge as to whether any properties of yours can be sold to reimburse your creditors.
In the case of secured properties, depending on the circumstances, the creditor may be entitled to repossess the property.
In the case of unsecured properties, however, the creditor is not entitled to take possession of any of your properties.
So, before the judge can rule on your bankruptcy request, you and your trustee will have to present him with a document listing all of your secured and unsecured debts.
Most debts that people have will fall into the unsecured category.
For example, the biggest unsecured item on most peoples list who file for bankruptcy is credit card bills.
The number of credit cards that people have in their possession has virtually exploded in the last twenty years.
Helping to push this explosion is the practice of millions of people borrowing and charging items to their cards way beyond their means.
And, in the last few years, with millions of jobs disappearing from the economy, many people have found themselves in a situation where they can't possibly pay back the credit card amounts that they owe.
It is this situation that is forcing many consumers to file for bankruptcy.
The second biggest unsecured type of debt that many people filing for bankruptcy have in common is medical bills.
Millions of people have no health insurance at all.
Millions more do have health insurance, but are under insured.
When a catastrophic illness such as cancer strikes a family in this situation, the medical bills that pile up can easily wipe them out financially.
By the time they have refinanced their home and charged their credit cards to the max to pay for medical treatments, they have nothing left.
Many times, when this happens, they have no other choice than to file for bankruptcy.
Other common unsecured debts are things such as alimony, child support, loans from relatives and friends, and utility bills such as your phone, gas, or electrical bill.
The court will rank your unsecured debts in orders of importance.
For example, an unpaid tax debt will be given precedence over a gas bill.
Child support will be given precedence over something like back rent.
The good thing, for the family, is that in most cases these unsecured debts will be the ones wiped out by the bankruptcy enabling the family to start over again.
The purpose is so that the bankruptcy trustee can inform the judge as to whether any properties of yours can be sold to reimburse your creditors.
In the case of secured properties, depending on the circumstances, the creditor may be entitled to repossess the property.
In the case of unsecured properties, however, the creditor is not entitled to take possession of any of your properties.
So, before the judge can rule on your bankruptcy request, you and your trustee will have to present him with a document listing all of your secured and unsecured debts.
Most debts that people have will fall into the unsecured category.
For example, the biggest unsecured item on most peoples list who file for bankruptcy is credit card bills.
The number of credit cards that people have in their possession has virtually exploded in the last twenty years.
Helping to push this explosion is the practice of millions of people borrowing and charging items to their cards way beyond their means.
And, in the last few years, with millions of jobs disappearing from the economy, many people have found themselves in a situation where they can't possibly pay back the credit card amounts that they owe.
It is this situation that is forcing many consumers to file for bankruptcy.
The second biggest unsecured type of debt that many people filing for bankruptcy have in common is medical bills.
Millions of people have no health insurance at all.
Millions more do have health insurance, but are under insured.
When a catastrophic illness such as cancer strikes a family in this situation, the medical bills that pile up can easily wipe them out financially.
By the time they have refinanced their home and charged their credit cards to the max to pay for medical treatments, they have nothing left.
Many times, when this happens, they have no other choice than to file for bankruptcy.
Other common unsecured debts are things such as alimony, child support, loans from relatives and friends, and utility bills such as your phone, gas, or electrical bill.
The court will rank your unsecured debts in orders of importance.
For example, an unpaid tax debt will be given precedence over a gas bill.
Child support will be given precedence over something like back rent.
The good thing, for the family, is that in most cases these unsecured debts will be the ones wiped out by the bankruptcy enabling the family to start over again.