Personal Bankruptcy (part 8)

The statuses of your creditors after you file bankruptcy

There are different types of claims held by creditors. The order in which they get paid, or even whether they get paid at all, completely depends on the status of each different type of claim. Below, we will list the 4 different categories they fall under. Next to each, we will give a brief explanation and example so you will better understand what you are looking at if you file bankruptcy.

1. Secured claims – these types of claims are debts that ere supported by liens on property. Mortgages and automobile loans are great examples of secured claims. At the time you got the loan, your loan docs gave the lender an interest in the property. This way, if you fail to pay the loan, the lender has the right to foreclose on it.
2. Priority claims – these types of claims are identified by the Bankruptcy Code as especially entitled fro repayment by the debtor. These types of claims would include child support, certain taxes, actual cost of filing bankruptcy. These claims will get paid before credit card claims will.
3. General unsecured claims – these types of claims include consumer credit cards and medical bills. These types of claims also include the balance of a secured claim beyond the equity that secures it. Basically, if you owe more on your home or auto that it is actually worth, the balance is considered a general unsecured claim.
4. Non-dischargeable claims – these types of claims are debts that are incurred through the misconduct by the person who has filed bankruptcy.

Keep in mind that bankruptcy gives you the chance to start over with a clean slate with your finances. Be absolutely certain to take full advantage of this and do not return to your old bad habits with money once you file. Even take a free community course on finances. Learn how to better manage your money from here on out. By doing so, you will better your chances at coming out of this well. You may even get so into bettering your finances that you turn your money into even more money. Learn how to create a financial cushion for you nay your family’s future. Just do not go back to the bad money management skills you already know you possess. By starting over fresh – do exactly that.

Be sure to keep reading this multi sectioned debt free article about bankruptcy. Now that we have covered so much, there are still a couple of things you need to be aware of as well. The next section will cover your day in court when filing bankruptcy.

Part 9…

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