Debts are, very simply put, what you owe to other people. The stuff that makes our lives so much harder and more stressful. There are a number of ways you can incur a debt, and depending on the circumstances, that debt will be treated differently in bankruptcy.
The largest debts most people will incur are for their homes and automobiles. These are debts that allow the lender to keep an interest in your property. If you don’t pay the debt, they can come and get it from you. This is called Secured Debt. Other types of secured debts include boats, RVs, ATVs, Jet Skis, etc. Most of these debts (but not necessarily all) in Chapter 7 must be sold to pay off your debts. The courts will allow you to keep your home and automobile if you do not have a lot of equity in it, and you will reaffirm your debt. An attorney will discuss with you in detail whether it is beneficial to you to reaffirm your debt or not. The bankruptcy court will not want to set you up for failure, so if you owe more on your home than it is worth, the bankruptcy court may not agree to let you keep the debt.
In Chapter 13 however, you are asking the Court to let you enter into payment arrangements with all of your creditors so you can pay as much of your debts as possible and retain your assets. The more you want to keep, the more you have to pay. The Court will ask that you pay all of your disposable income to pay your debts over several years so that as much of your debts can be paid as possible. Once you reach the end of the plan period, the Court can discharge the remaining debts and allow you the fresh start with a lot of assets still in your possession.
Debts that are not attached to property are called unsecured debts. There are some of these you can get rid of (like credit cards) and some you cannot (like child support). You need to provide a full list of all of your debts and obligations to consider the outcomes under the various Chapters of bankruptcy. There are of course rules and limits on who can file for the different types of bankruptcy and which debts you can get rid. You should ask a qualified, bankruptcy attorney to review your debts to determine what provides you with the best possible outcome.
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