Possessing An Unsecured Debt?
An unsecured debt is one in which the debtor has not offered any collateral, and the creditor has not filed a lien against you to satisfy. The creditor is not able to seize any of your property, if the debt is unsecured. Whether it be credit and charge card purchases, gasoline company credit card purchases, student loans, medical bills, back rent, utility bills or union dues, the entity owing the money cannot take anything from the debtor. A well-practiced bankruptcy attorney can help you identify the classification of the various types of debts you may possess.
Understanding the character of a priority debt
Within the classification of unsecured debts, there are priority debts, which are significant enough to advance to the first priority status in the bankruptcy repayment line. If a debt has first priority status, then the debt is paid first when a Chapter 7 trustee distributes property during the case. It is critical to know whether an unsecured debt is a priority debt, given you should utilize their property (finances) to pay off a debt, which will not be discharged. Under 11 U.S.C. §507 of the Bankruptcy Code, priority debts include:
- Maintenance, alimony, or support
- Income taxes (specifications apply)
- Penalties, customs and duties owed to federal and state governments
- Employee benefit plans contributions
- Salaries, wages and commissions owed by employer
Therefore, for example, liability for a state or federal income tax cannot be discharged in bankruptcy, given it is a priority debt. A well-practiced New York consumer bankruptcy attorney can provide clarity to clients in classifying debts.
Obtain assistance from a highly skilled New York bankruptcy attorney
By seeking assistance from Mark E. Cohen, Esq., you can acquire information from an experienced bankruptcy attorney who is dedicated to understanding the circumstances surrounding each client’s financial issues. The office represents clients in New York City and the surrounding areas.