Those who are ready to file for bankruptcy have a lot to consider. Bankruptcy is an often complex process, which is why those who are fling need the legal assistance of a New Jersey bankruptcy attorney who has years of experience guiding his clients to their safe harbors. If you have been looking into filing for bankruptcy, you most likely see and hear various legal jargon being tossed around, and at times, it can seem overwhelming. One of the most common legal terms you will hear about is “priority debt.” Please read on and reach out to our experienced bankruptcy firm to learn more about these debts and how we can help you through the bankruptcy process going forward. Here are some of the questions you may have:
Are There Different Types of Debt?
Since most people have several different types of creditors, the law treats different types of debt as such. The three primary types of debt are known as secured debt, general unsecured debt, and priority debt. Secured debt is essentially defined as debt backed by a mortgage or other lien. Secured debts allow the creditor to pursue specific pledged property upon default. Generally, unsecured debt is not a priority debt, and therefore, the creditor has no security or collar over. These are generally the least favored debts in bankruptcy cases.
What Is a Priority Debt?
Priority debt deals with the most important types of debt that you owe. Generally, these debts are unsecured, however, certain priority debts have a lien, making them a secured debt. Consequently, this makes them all the more powerful. Priority debts generally must be paid in full, while other unsecured debts may end up receiving less, or no payment at all.
Why Are Certain Debts Recognized as Priority Debts?
There are reasons why certain debts cannot simply be whisked away by filing for bankruptcy. Alimony or child support payments are generally not exempt from being discharged because our nation believes that children should not have their life negatively impacted by the financial ramifications of a divorce, for example. Child support is considered one of the most important debts an individual can pay, and is, therefore, recognized as a priority debt.
Contact Our Experienced New Jersey Firm
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you need experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.