Unsecured Debt

When a person files for bankruptcy, that person will be required to list his or her liabilities. Debts may be categorized as secured or unsecured debt. Unsecured debt is a liability or obligation that is not covered by specific property like a home or a vehicle.

Unlike a secured debt, if you fail to make payments on an unsecured debt, the creditor cannot then take away your property. Moreover, unsecured debts are not accompanied by a lien and are generally easier to get discharged in bankruptcy.

Attorney for Unsecured Debts in Bankruptcy in Dallas, TX

A bankruptcy attorney in Dallas, TX, can help you decide when it is best to file for bankruptcy and whether you should file Chapter 7 or Chapter 13 bankruptcy. An experienced lawyer can explain whether your property and assets will be protected if you decide to file for bankruptcy and whether the liabilities are considered secured or unsecured.

If you need to file bankruptcy in Dallas, TX, then contact an Littlefield Law Firm. We represent clients in bankruptcy court throughout the greater Dallas-Fort Worth area including in the Northern District of Texas at the Earle Cabell Federal Building in Dallas. We also represent clients in the US Bankruptcy Court for the Eastern District of Texas in Plano, TX.

Littlefield Law Firmis located in north Dallas, Texas. Our lawyers represent clients throughout Dallas County, Collin County, Kaufman County, and Rockwall County. Call (972) 812-0900 today.

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Information Center for Unsecured Debt

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Common Types of Unsecured Debt

Typically, unsecured debt is consumer debt. Consumer debts are those debts that a person acquired as a result of purchasing goods like a Macy’s credit card for example. Consumer goods are “consumable” and do not appreciate in value over time.

Not all consumer debt is unsecured debt. The most common types of unsecured debts include the following:

  • department store credit cards
  • student loans
  • medical bills
  • cell phone/cable/internet bills
  • other utility bills

It is important to remember that debts that require a deposit are secured debts. The loan is secured by the money that the individual puts down at the outset of the loan.

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Unsecured Debt in Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is considered liquidation bankruptcy. Liquidation means that all of the petitioner’s assets that are not set aside (exempt), are sold at their fair market value, and used to pay off the debtor’s creditors.

Unsecured debt has a lower priority than secured debt. Given that, after an individual’s assets are liquidated the proceeds are distributed to the creditors based on the priority. Secured debts are higher in priority than unsecured debts and will be paid off first.

Often times, a petitioner’s assets are not enough to cover the balance of the unsecured debt. Since unsecured debts are at the bottom of the totem pole, they are paid last. Unsecured debts that are left after a debtor’s property has been liquidated and sold are generally discharged.

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Unsecured Debt in Chapter 13 Bankruptcy

Chapter 13 Bankruptcy reorganizes an individual’s debts and takes his or her “disposable” income to repay his or her debts. Unsecured debts will be paid in the order of their priority.

Under Chapter 13 Bankruptcy, a person’s unsecured creditors will receive the same amount that it would have received under Chapter 7. Unsecured creditors may or may not receive a distribution in a Chapter 13 case. If there is “disposable income” left after a person’s secured creditors have been paid under reorganization, then those creditors may receive a distribution based on their “disposable income.”

If the debtor is below median income or does not have excess disposable income, unsecured creditors may not receive a distribution and will be discharged in full.

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Additional Resources

Bankruptcy Basics – Visit the official website of the U.S. Courts to find out more information about the basics of bankruptcy. The article provides an overview of chapter 13 bankruptcy and what happens after a person files for chapter 13 bankruptcy in Texas.

Unsecured Debt – Visit Debt.Org for an explanation of unsecured debt and what it entails. The website provides thorough examples of the various types of unsecured debt and how each of them can affect your bankruptcy process. The article discusses unsecured debt like credit card debt, a personal loan, and a business loan.

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Find a Lawyer for Unsecured Debt in Bankruptcy in Dallas County, TX

If you are considering filing for consumer bankruptcy in Dallas, TX, under either Chapter 7 or Chapter 13, then seek out the services of the experienced attorneys at Littlefield Law Firm. With an office located in Dallas, TX, we help consumer bankruptcy debtors settle their debts effectively.

At Littlefield Law Firm, we can help you adhere to all of the applicable clerk's office and court-imposed deadlines, the court's local rules and procedures, and the requirements of the bankruptcy code. Our experienced attorneys are familiar with all of the required laws and policies, including the Federal Rules of Bankruptcy Procedure, the Local Court Rules, and the United States Bankruptcy Code.

Linda Littlefield represents clients throughout Dallas County, Collin County, Kaufman County, Rockwall County, and other areas throughout Dallas, Texas.

Call (972) 812-0900 today.

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Linda Littlefield