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How do I know if a debt is secured, unsecured, priority or administrative?

Generally, the following definitions will apply. However, if you are not sure about the classification of a debt, you should seek competent legal advice.


Secured:Debt that is backed by real or personal property.  A creditor whose debt is secured has a legal right to take the property as full or partial satisfaction of the debt. For example, most home and car loans are secured debt. This means that the lender has the right to take the home or car if the borrower fails to make the payments on the loan.


Unsecured:Debt backed by a promise to pay without any real or personal property to collateralize the debt. Most debts for services and some credit cards are unsecured debts.


Priority: Debts entitled to payment ahead of other debts, such as taxes, wage claims of employees, and domestic support obligations. A listing of priority debts is given, in general terms, in § 507 of the Bankruptcy Code.


Administrative: Debt created when someone provides goods or services to your bankruptcy estate.  This is also a priority debt.  An example of administrative debt is the fee generated by attorneys or other professionals whose employment has been authorized by the court to represent the bankruptcy estate.

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