Chapter 13 bankruptcies, are generally, a reorganization of your debt. They last a minimum of 36 months and a maximum of 60. (With a current limited exception due to COVID, which may extend the length) During the chapter 13 you make monthly payments.
Your attorney will help you make what is called a plan. The plan lays out your chapter 13 length, payment schedule, and any special provisions you may have.
The amount of your monthly payments are based not only on your disposable income, but also what you have to pay in the bankruptcy. A few examples of what you may end up paying in your monthly payments are, attorney fees, trustee fees, vehicle payments, home arrears, back taxes, child support arrears, etc. In a chapter 13 your unsecured creditors will be paid something. Your unsecured creditors may not be paid in full, but this depends on the circumstances of your case.
You will make these payments to the bankruptcy trustee each month. The trustee then distributes the funds paid in. How much each creditor receives is dependent on the bankruptcy plan and the claims your creditors file.
At the end of the bankruptcy plan, any remaining unpaid unsecured debt is discharged. For example, if you have $20,000 in unsecured debt, but over the life of the chapter 13 plan they only receive $5,000, the remaining $15,000 would be discharged.
Your attorney will walk with you through each and every step of the chapter 13 bankruptcy. Visit www.kainscott.com to speak with an attorney today. You will be glad you did!