When you file for bankruptcy, you will be required to disclose your debts—which are also called creditor claims in bankruptcy court—and classify them as secured (home mortgage), unsecured (credit cards), priority unsecured (child support, alimony), or nonpriority unsecured (credit cards, medical bills).
Priority unsecured debts cannot be discharged in a Chapter 7 bankruptcy, and you will remain responsible for them after your Chapter 7 bankruptcy. Priority unsecured debts also cannot be discharged in a Chapter 13 bankruptcy, and must be paid in full in a three-to-five-year repayment plan.
In Texas, as in all states, when filing for bankruptcy, individuals are required to list all of their debts and categorize them accordingly. Secured debts are those tied to an asset, like a home mortgage. Unsecured debts are not tied to any asset and include credit card debts and medical bills. Among unsecured debts, there are priority unsecured debts, such as child support and alimony, which are given special status. These priority debts cannot be discharged in a Chapter 7 bankruptcy, meaning the debtor will still be responsible for them after the bankruptcy process is completed. Similarly, in a Chapter 13 bankruptcy, priority unsecured debts cannot be discharged either, and the debtor must include them in the repayment plan and pay them in full over the course of the three-to-five-year plan period. It's important to accurately classify debts in the bankruptcy process, as this determines how they will be treated. An attorney can provide guidance specific to the bankruptcy laws in Texas and help ensure that all debts are properly disclosed and classified.
