Texas Bankruptcy Lawyer - Bankruptcy Attorney

How do I know if a debt is secured, unsecured, priority or administrative so I can fill out my schedules correctly?

The type of debt you have depends on the agreement or circumstance which gave rise to the debt when you incurred it. In bankruptcy, your debts are characterized in four types, which are defined below. The types of debt are secured, unsecured, priority, and administrative debts.

Unsecured Debt: A debt is unsecured if you have simply agreed to pay someone a sum of money at a particular time, and you have not pledged any real or personal property as collateral for that debt.

Secured Debt: A secured debt is a debt that is backed by property. A creditor whose debt is "secured" has a right to take certain property to satisfy its "secured debt." For example, most people who buy new cars on credit give the lender a "security interest" (often called a "lien") in the car. This means that the debt is a "secured debt" and that the lender can take the car if the borrower fails to make payments on the car loan. A home mortgage is another example of a secured debt.

Priority Debt: A priority debt is a debt entitled to priority in payment, ahead of most other debts, in a bankruptcy case. A listing of priority debts is given, in general terms, in 11 U.S.C. ' 507 of the Bankruptcy Code. Examples of priority debts are some taxes, wage claims of employees, debts related to goods and services provided to a debtor's estate during the pendency of a bankruptcy case, and alimony, maintenance or support of a spouse, former spouse, or child.

Administrative Debt: An administrative debt is also a priority debt and is one created when someone provides goods or services to your bankruptcy estate. One example of an administrative debt is the fees generated by attorneys in representing the bankruptcy estate.

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