Does a Chapter 13 Bankruptcy Require Repayment of All Debt?

Posted by Madison Newberg on June 3, 2025 at 5:30 AM

shutterstock_1442868044With a Chapter 7 bankruptcy, your debt typically isn’t repaid. It is often times referred to as a fresh start bankruptcy. In a Chapter 7 bankruptcy any non-exempt assets are liquidated by the Trustee and the proceeds are used to pay towards your debts. To the extent your debts are not paid off, they get wiped out or discharged. The vast majority of Chapter 7 cases are no assets cases, meaning there are no proceeds to disburse to creditors.

A Chapter 13 bankruptcy works differently. Instead of liquidating assets and paying creditors, a repayment plan is created. The payment plan last between three and five years. But does this mean that the debtor will have to repay the full amount of all the debt they owe? It depends on the specific plan. 

A Chapter 13 is like a government sponsored debt consolidation plan. The payment plan is based on a variety of factors. First, debtors make payments based on their ability to pay, not what their creditors want them to pay. At the end of the of the three to five years, whatever debt hasn’t been paid gets discharged or wiped out. 

There are other factors that go into creating the payment plan. Certain debts must be paid during the life of the plan. Things like certain tax debt, mortgage arrears, and child support must be paid during the plan. These kinds of debts play a role in determining your payment plan. 

The goal of a Chapter 13 is to create an affordable payment plan based on the debtor’s ability to pay. Every case is unique. An experienced bankruptcy attorney will help you understand your options. Your attorney will guide you through the process and create a payment plan that works for you. 

 

CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM

If you are dealing with an overwhelming debt problem, it is important to discuss your options with a bankruptcy attorney. If you have questions about bankruptcy and would like to do a free consultation to go over your options, visit www.lifebacklaw.com to speak with an attorney. You will be glad you did! 

 

Topics: Does bankruptcy clear all debts?, Do you have to pay everything back in chapter 13?

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