Bankruptcy Chapter 13 | Bankruptcy Debts
Chapter 13 Bankruptcy is repayment plan whereby you agree to pay back creditors over a set term – usually three years. Chapter 13 bankruptcy therefore does not discharge debts like Chapter 7 – making it the creditors preferred option. It is not just creditors who prefer Chapter 13, many debtors decline chapter 7 due to a moral sense of obligation or because Chapter 13 stays on a credit report for seven years rather than 10. More...
Under a Chapter 13 repayment plan you will make monthly payments to your Chapter 13 Trustee. Your trustee will skim off a commission and pay creditors on your behalf.
Under Chapter 13, some debts are considered priority, including:
- Administrative costs for filing bankruptcy,
- Alimony,
- Child support,
- State and federal income tax (repaid in full)
- Mortgage defaults (repaid in full if you wish to keep your home)
- Missed car payments (repaid in full if you wish to keep your car)
Unsecured debts will be paid back according to the level of disposable income.
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