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Different debts have different prioritizations in bankruptcy

In Tennessee, a Chattanooga resident may hold a number of different debts. They may carry balances on their credit cards and may owe money on their home mortgage. If they have a car payment then they are also responsible for paying off a debt to a lender and they may also have debts to banks, friends and family members. All of these different debts, when lumped together, can make for an overwhelming financial situation for the individual and may eventually lead them to consider filing for bankruptcy.

It is important that people who may wish to file for bankruptcy discuss their needs with legal professionals who work in the personal bankruptcy field. This is because, as mentioned before on this blog, not all debts may be discharged in bankruptcy. Depending upon the prioritization of the debt a person may still carry certain debts with them even after getting their bankruptcy discharge.

Debts such as unpaid child support and unpaid taxes generally cannot be discharged and will survive personal bankruptcy proceedings, while debts such as home and car loans may be discharged depending upon the form of bankruptcy the individual pursues. These types of loans are called secured loans because there is a piece of property attached to them that may be taken back by a lender if the debtor fails to make timely and complete payments.

Unsecured debts, such as those carried on credit cards or owed to private parties, can also be discharged in bankruptcy. As the lender of an unsecured debt has no collateral to take back when a borrower defaults they may impose other financial penalties on that person when they fail to meet their financial obligations.

A person whose debts are all of a priority that cannot be discharged may not benefit from the bankruptcy process. However, this type of case-specific review should be undertaken with a legal professional who represents individuals who wish to utilize the protections offered by personal bankruptcy.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
Phone: 423-624-4002
Fax: 423-624-0509
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