Chapter 13 bankruptcies are structured so that the debtor spends between three to five years repaying their debts. Once the time period is over the remaining balances of most debtswill be discharged. The way these debts are structured is not random or a first come first serve basis; there is a particular priority formula that a
bankruptcy trustee uses to determine who gets paid and when.
Debts that are considered a priority include debts such as child support obligation and some tax debts. These types of debts get paid in full through your Chapter 13 plan. Your secured debts are usually expected to be paid at 100%; these typically include your mortgage and car payments and anything else that is secured by this property. Some secured debt may be avoided, stripped-off, or crammed down. Your bankruptcy attorney will go over these items with you in detail.
Chapter 13 Non-Priority Debts
Your general unsecured debts, or those that are not tied to any piece of property and are not priority debts, are the ones that fall into this category. You will be expected to pay as much towards these debts as your disposable monthly income allows. It is possible that general unsecured debts may be paid back at a very low percentage on the dollar. After you receive your Chapter 13 discharge, any remaining balance of these general unsecured debts is discharged.
Your Chicago bankruptcy attorney can help you determine how your debts will be treated and which ones will fit into your repayment plan.