Are All Debts Created Equal?

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In this video, Josh Sternberg from Sternberg Law Group explains that not all debts are treated equally in a Chapter 13 bankruptcy. He compares the classification of debts to a totem pole, with different classes indicating their priority. The hierarchy includes:

Class 1: Administrative and priority debts, which include Chapter 13 trustee fees, attorney fees, and priority tax debts like those owed to the IRS or California's Franchise Tax Board. Not all tax debts are priority, so an analysis is needed to determine their classification.

Class 2 and 3: Secured debts, such as mortgages and auto loans, which are backed by collateral (like a home or car).

Class 4: Also made up of secured debt, though specifics are less commonly discussed.

Class 5: General unsecured debts, such as credit cards, which are at the bottom of the priority list.

Sternberg emphasizes that higher-priority debts, such as those that keep a roof over your head, should be addressed before paying off lower-priority debts like credit cards. He also notes that if secured debt matures within the five-year bankruptcy plan, it must be fully paid off; otherwise, regular payments can continue beyond the plan.

He advises consulting an attorney for more complex questions and encourages viewers to reach out to his law firm for assistance, especially if they're in California.

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#sternberglawgroup #foreclosureattorney #mortgageattorney #bankruptcy #loanmodification Disclaimer: The information provided in this video is for general informational purposes only and is not intended to be legal advice. Viewing this video does not create an attorney-client relationship. If you require legal advice, please consult a licensed attorney in your area