Whether you are in a Chapter 7 or 13 bankruptcy, you never want to get behind – especially on secured debts. This is because out of three types of debts – secured, priority, and unsecured; secured debts are usually attached to the most important things in your life and cannot be discharged away. In addition, secured loans need to be current for you to qualify for a Chapter 7 bankruptcy.
Out of the three types, secured debts are almost always the most important ones to keep an eye on. Secured debt is debt that you have collateral on; meaning you still have the property in your hands. The most common types of secured debts are mortgages, car notes, and large appliances. However, they can also extend to other unique purchases like a set of tools or mattresses, if there is a payment plan attached. These debts stay secured unless you pay off the debt or surrender the property to the lender. If you surrender the property to the lender, the remaining debt converts to unsecured debt. However, if you destroy or lose the property, your options are much more limited. While you never want to be behind on any debt, the reality is that your money has priorities. And even if you rent your home and drive a fully paid off car, you will still need to know which debts need to paid first to maximize the benefits of your bankruptcy. Sometimes, it's not worth paying off your dryer if you have no way of getting to work.
If you are already behind, don't fret! Even if you don't qualify for a Chapter 7 bankruptcy, you may still reduce the length of a Chapter 13 bankruptcy repayment plan. There's never too deep a hole for us to dig you out of. We've handled cases with six figure debt and clients with multiple active lawsuits pending. There's nothing too scary for us to tackle. In any scenario, filing for bankruptcy immediately halts every creditor from going forward on their collection efforts by law. To even talk to you, they need to go through us when you hire us. We're your first and best defense. This is why the best time to come to us is before you get behind on any payments. The second best time is right now.