Many people have heard of the debt eliminating benefits of bankruptcy, but few actually know which debts are eligible and which may need to be managed carefully. When it comes to eliminating debts in Dayton bankruptcy it is important to know which type of debt you are carrying, whether its eligible, and which bankruptcy chapter could benefit you the most.
Debts are categorized in two basic categories: secured or unsecured. Secured debts are those with assets tied to the loan as collateral like a mortgage or car loan. Defaulting on a secured debt leaves that asset up for repossession by the lender. Unsecured debts are those that are not tied to any personal property as collateral like credit cards, medical bills, and utility bills. Student loan debts, back taxes and unpaid domestic support payments are also unsecured debts, but they are also considered priority debts; meaning they are difficult to have discharged in bankruptcy.
Filing for bankruptcy will most likely easily eliminate your non-priority unsecured debts like medical bills, credit card bills, missed utility bills, and even some personal loans. Business debts and those related to business contracts are also typically eligible for elimination in bankruptcy. While some taxes are eligible for a discharge in bankruptcy, the other priority debts are a bit tricky. These types of special case debts must be approved by the court and are usually only eligible to be resolved as part of a Chapter 13 repayment plan.