Chapter 13 Bankruptcy Repayment Plans


A Chapter 13 bankruptcy can almost be thought of as a consolidation repayment plan as opposed to a Chapter 7 bankruptcy where most or all of your debts are eliminated. In a Chapter 13 bankruptcy a trustee will be assigned to your case and they will determine the priority level of your debts.

Once you have supplied your bankruptcy trustee with all of the required paperwork and information on your debts they will arrange a 341 meeting, which is a chance for your creditors to present their case. Often the creditors opt not to appear for these but there is a chance that they will come to prove why their debt is a priority and should be paid.

The bankruptcy trustee will consider all of the information you provided, the pleas of your creditors, and any additional information you may have given at the 341 meeting and most importantly, they have an established format (it varies by state) for prioritizing debt.

The debts which rank highest are paid at 100%, these include all of the debt or fees you've incurred by filing for bankruptcy and future fees related to this action, child support, alimony, tax debts, wages and anything else you owe employees.

Your secured debt is also considered to be a top priority and you can expect to pay 100% of your mortgage, car payments and other secured debt.

Your unsecured debt, typically your credit card debt and personal loans, will be prioritized on a sliding scale that can run the gamut from 0 to 100%.

It's not uncommon to have debts which don't seem to fit any of the categories listed above or which fall into a couple categories. Your bankruptcy trustee will determine where this debt falls and at what percentage it will be paid.

Before you decide to file for a Chapter 13 bankruptcy you should speak with a Chicago bankruptcy attorney to determine if this is the right option for you.