subject: Bankruptcy and Unsecured Properties [print this page] When you file for Chapter 7 bankruptcy, you will be asked to list all of your secured debts and unsecured debts. The reason is so that the bankruptcy trustee can inform the judge as to whether any properties of yours can be sold to reimburse your creditors.
Normally, the creditor can repossess property if it is a secured property. A bankruptcy filing will usually delay the repossession, but not stop it. In the case of unsecured properties, however, the creditor is not entitled to take possession of any of your properties. So, before the judge can rule on your bankruptcy request, you and your trustee will have to present him with a document listing all of your secured and unsecured debts.
If you are like most consumers, the majority of your debts will be those of the unsecured type. As an example, usually the largest unsecured item on most peoples list who file for bankruptcy is credit card bills. The number of credit cards that people have in their possession has virtually exploded in the last twenty years. Helping to push this explosion is the practice of millions of people borrowing and charging items to their cards way beyond their means.
Now, in the past couple of years, as hundreds of thousands of jobs have disappeared from the work force, a number of people have found themselves in a situation where they can't possibly pay back the credit card amounts that they owe. It is this situation that is forcing many consumers to file for bankruptcy.
Medical bills is, by far, the second largest type of unsecured debt that many people filing for bankruptcy have. Especially for those who have no health insurance. Millions more do have health insurance, but are underinsured.
A catastrophic illness can devastate a family financially. A cancer illness can result in them having to spend thousand to hundreds of thousands of dollars for medical treatments. By the time the family has refinanced their home and charged their credit cards to the max to pay for medical treatments, they have nothing left. Many times, when this happens, they have no other choice than to file for bankruptcy.
Some other popular unsecured debts are factors such as spouse support payments, child support payments, loans from relatives and friends, and utility bills such as your phone, gas, or electric bill. Part of the duties of the court is to rank your unsecured debts in order of importance. For example, an unpaid tax debt will be given precedence over a gas bill. Child support will be given precedence over something like back rent.
Fortunately, for the sake of the family, in the vast majority of cases these unsecured debts will be the ones wiped out by the bankruptcy enabling the family to start over again.
