Chapter 13 Bankruptcy: What Am I Obligated to Pay?

What You are Obligated to Pay During Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a repayment plan that helps reorganize outstanding debt. The purpose of this filing is to create a payment plan that will help you handle debt over a certain time period. There are guidelines that should be met upon filing including meeting income requirements, providing necessary documentation to complete the filing process and completion of credit counseling. Once your payment plan has been created, you’ll make payments to the appointed Trustee who will forward payments to your creditors.

How much you pay will depend on what creditors are entitled to. Some will be entitled to receive the entire amount owed while others may see a smaller percentage or nothing at all. Aside from paying fees to file your case, there is what’s called priority debts that would be paid the entire amount or 100 percent of what is owed. This may include back child support or alimony, certain tax debts and any contributions owed to an employee benefit fund.

Chapter 13 helps many people keep personal property such as their home or vehicle. If there are defaults related to your mortgage or other secured debt, they will be included in the payment plan as well. Unsecured debts may be paid a percentage or nothing at all depending on whether or not you have disposable income to put toward them, the length of your bankruptcy and the value of nonexempt debt.  The duration of your payment plan may depend on your monthly income amount. Questions and concerns should be reviewed with a qualified bankruptcy attorney .