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, when filing for bankruptcy, individuals are required to list all of their debts and categorize them accordingly. Secured debts are those tied to collateral, like a home mortgage. Unsecured debts are not backed by collateral 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. Nonpriority unsecured debts typically include credit card debts and medical bills. Priority unsecured debts are not dischargeable in a Chapter 7 bankruptcy, meaning the debtor remains responsible for these debts even after the bankruptcy process. Similarly, in a Chapter 13 bankruptcy, priority unsecured debts cannot be discharged and must be paid in full over the course of the repayment plan, which lasts between three to five years. It's important to accurately classify debts in the bankruptcy process, as this determines how they will be treated under bankruptcy proceedings.
