Understanding Arizona Bankruptcy Claims
Our Phoenix bankruptcy attorney explains the types of bankruptcy claims in Arizona.
Priority Unsecured Claims
Priority unsecured claims are claims that are not secured by collateral but that have priority over other debts under federal law. These debts have priority typically for public policy reasons– that is, the well-being of the community relies upon these debts being paid. Priority unsecured debts in a personal chapter 7 or chapter 13 bankruptcy case might include child support, spousal support, and any various other domestic support obligations; certain income taxes; and any amount you owe if you caused the death or serious injury of another person while driving under the influence of drugs or alcohol.
Priority unsecured debts are non-dischargeable, meaning any amount that does not pay through your bankruptcy will still be outstanding after the bankruptcy. The bankruptcy does not wipe out your obligation on priority unsecured debts unless they are paid in full through the case.
General Unsecured Claims
General unsecured debts include credit card debts, student loans, personal loans, some utilities, and medical bills. After the bankruptcy estate pays administrative expenses, priority unsecured claims and secured claims, general unsecured creditors will receive a share of the remaining funds, if any.
General unsecured debts are typically dischargeable, which means any amount not paid through your bankruptcy is wiped after your bankruptcy and no longer your responsibility. There are exceptions to this rule; student loan debt is only dischargeable if you can demonstrate extreme hardship.
Secured claims are claims for debts that are secured by an interest in a property. A secured creditor can take that property, the collateral, if you disregard on the debt. The most common secured loans are car loans and mortgage loans, but you may also have secured loans for furniture, jewelry, watercraft, and other kinds of property.
In a bankruptcy case, secured claims must be paid in full if you desire to keep the property that secures the loan. If you decide to surrender the property (give it up), the loan is treated as a general unsecured debt and the associated debt can be discharged.
Bankruptcy today is complicated and a bit scary. You don’t need to live in fear of your creditors and you don’t need to lose sleep over bills that you cannot afford to pay. Bankruptcy laws were written for good people like you who run into financial hard times. The bankruptcy attorneys at Phoenix Fresh Start Bankruptcy attorneys can help. Our easy payment plans and free credit repair, together with your bankruptcy can lift your financial burdens and give you the fresh start you deserve. Call us today.