What are your obligations under Chapter 13?

Under a Chapter 13 reorganization plan, you will have to make monthly payments to your Chapter 13 Trustee, who will use the proceeds to pay your creditors and collect his or her own commissions. Certain types of debt will have priority over others. For instance, administrative costs (the costs to file for bankruptcy), alimony, child support, and state and federal income tax will be paid back fully, as will mortgage defaults and missed car payments, if you want to keep your house and car. Unsecured debts (generally, those debts that would be completely discharged under Chapter 7) will be paid back according to your income and existing assets. In many cases, under Chapter 13, many of these creditors may see very little of their debt paid, depending on how much of your disposable income you have to put toward your debts. The amount of unsecured debts that will be paid often also depend on the attitude of your bankruptcy court; many courts will not approve a plan that doesn’t allow for paying back these creditors at least 50 percent of their owed debts.