Table of Contents
- Unsecured Debts: Credit Cards, Medical Bills, Personal Loans
- What Are Unsecured Debts?
- Common Types of Unsecured Debts:
- How Are Unsecured Debts Treated in Bankruptcy?
- Chapter 7 Bankruptcy:
- Chapter 13 Bankruptcy:
- Are There Any Exceptions?
- Do Creditors Still Get Paid Anything?
- Why Bankruptcy Is So Effective for Unsecured Debt
- How a Bankruptcy Attorney Near You Helps
- ReferU.AI Makes Filing Simple
- Final Thought: You Deserve a Fresh Start
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Unsecured debts, such as credit cards, medical bills, and personal loans, can significantly impact your financial stability. Understanding how these debts are treated in bankruptcy is crucial, and a knowledgeable bankruptcy attorney near you can guide you through the process of achieving debt relief and a fresh financial start.
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Discover how to manage and eliminate unsecured debts like credit cards, medical bills, and personal loans through bankruptcy. Learn about the different treatments for these debts in Chapter 7 and Chapter 13 bankruptcy, and find an experienced attorney near you to guide you towards a financial fresh start.
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Mar 30, 2025 06:22 PM
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Unsecured Debts: Credit Cards, Medical Bills, Personal Loans
When you file for bankruptcy, one of the first distinctions your attorney will make is between secured and unsecured debts. Secured debts are backed by collateral (like a car or house), while unsecured debts are not tied to any property—and that often makes them easier to discharge.
In this post, we’ll focus on unsecured debts—what they are, how they’re treated in Chapter 7 and Chapter 13 bankruptcy, and how a bankruptcy attorney near you can help you eliminate them for good.
💡 For every post in this series, scroll down to “Related Posts.”
What Are Unsecured Debts?
Unsecured debts are those that don’t involve collateral. If you default, the creditor can sue you—but they can’t automatically take your property like they could with a secured loan.
Common Types of Unsecured Debts:
- Credit card balances
- Medical bills
- Personal loans (without collateral)
- Utility bills
- Payday loans
- Old rent or lease balances
How Are Unsecured Debts Treated in Bankruptcy?
Chapter 7 Bankruptcy:
This is the most common type of bankruptcy—and the most effective at eliminating unsecured debt. If you qualify, most (or all) of your unsecured debts will be discharged completely, meaning you’re no longer legally responsible for them.
Chapter 13 Bankruptcy:
In a Chapter 13 repayment plan, you’ll pay back a portion of your unsecured debts over 3–5 years. The amount you repay is based on:
- Your disposable income
- The value of non-exempt assets
- The priority level of other debts (e.g., taxes, child support)
Once your plan is complete, the remaining unsecured debts are discharged.
Are There Any Exceptions?
Yes—not all unsecured debts are dischargeable. These include:
- Student loans (unless you prove undue hardship)
- Certain tax debts
- Debts from fraud or malicious injury
- Court fines or criminal restitution
See our related article Does Bankruptcy Eliminate All Debts? Breaking Down Dischargeable vs. Non-Dischargeable Debts for more.
Do Creditors Still Get Paid Anything?
In Chapter 7, unsecured creditors usually receive little or nothing unless you have non-exempt assets that are sold to pay them. In Chapter 13, they get whatever portion your plan allocates—often just pennies on the dollar.
Why Bankruptcy Is So Effective for Unsecured Debt
Bankruptcy gives you a legal pathway to wipe the slate clean. It’s especially powerful for those who are:
- Drowning in high-interest credit card debt
- Overwhelmed by hospital bills
- Trapped in a payday loan cycle
Once discharged, you can stop struggling month-to-month and start rebuilding your financial life.
How a Bankruptcy Attorney Near You Helps
A bankruptcy lawyer near you can:
- Review your unsecured debt types and discharge eligibility
- Strategize which chapter gives you the most relief
- Maximize exemptions to preserve assets
- Protect you from creditor harassment during the process
ReferU.AI Makes Filing Simple
ReferU.AI connects you with a bankruptcy attorney near you who understands your unique debt situation and how to achieve the best outcome. Our AI-powered platform takes the guesswork out of legal help—matching you with the right professional for your case.
Final Thought: You Deserve a Fresh Start
Unsecured debt shouldn’t define your future. With the right legal guidance, you can eliminate the burden, protect your peace of mind, and build a brighter financial tomorrow.
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