The order and amount in which debts are paid will depend on the type of debt and its priority. The first debts to be paid are attorney’s fees and fees paid to the trustee. Once those are paid, secured debts are next, followed by priority debts, and lastly unsecured debts.
Secured debts have some type of collateral attached to them, such as your car or home. Your car loan must be paid in full in your Chapter 13, but you only have to catch up any past due balance and remain current on your mortgage. Your mortgage may or may not be included in your plan, depending on the jurisdiction in which your petition is filed.
Priority debts include child support, spousal support, and certain tax debts. These debts must be paid in full through your Chapter 13 plan, or your plan won’t be approved. Once these debts are paid, the trustee will begin sending payments to your unsecured creditors. Most unsecured creditors will be discharged after your bankruptcy, even if you only pay a small portion of their debts.
CONTACT AN EXPERIENCED CHAPTER 13 BANKRUPTCY ATTORNEY