Understanding The Different Types Of Debt

At Nowack & Olson, we are a team of professionals driven to help individuals, families and businesses reduce their debt. We have helped thousands of clients in South Florida find financial freedom using bankruptcy.

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Everyone has a unique arrangement of debts, which means no two bankruptcy cases are exactly the same. There are several types of debt that affect the majority of bankruptcy filings. However, some of them may be discharged in bankruptcy such as:

  • Unsecured debt – Unsecured debt involves money owed, but without any special right to your property. In other words, there is nothing for the creditor to repossess or take away from you if you do not pay. Some common examples of unsecured debt are credit card debt and medical debt. These debts are usually dischargeable in bankruptcy.
  • Secured debt – Secured debt means the creditor has the legal right to take something away from you if you do not pay. For example, car loans, mortgages, and debt for physical goods like furniture and jewelry all entitle the lender to take the property back if it does not receive payment.

There are several specific types of debt that are not dischargeable in bankruptcy.

  • Student loan debt – You may be able to wipe out student loans if you can prove that repayment would be an "undue hardship," but that is difficult to do. A knowledgeable attorney can help you understand your options.
  • Tax debt – Tax debt is not dischargeable, but Chapter 13 can allow you to develop a reasonable repayment plan to catch up.
  • Domestic support obligations – Alimony and child support may not be wiped out in bankruptcy, but other benefits of bankruptcy can make them easier to pay.

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Ready to stop drowning in debt? Contact us online or call us at 888-813-4737 to speak with a lawyer, and begin repairing your finances.