In a successful Chapter 13 Bankruptcy a client will take some time, 3 to 5 years, to repay secured and priority debts through a Chapter 13 Plan. Secured debts are debts with collateral attached to the note such as a mortgage or loan. Priority debts include important debts such as child support and taxes.
During the Chapter 13 Plan clients will make Chapter 13 payments. A client’s ongoing mortgage payments are included in the Chapter 13 Plan payment as well as any mortgage payments missing prior to filling. Some clients may also choose to include or secured debts, such as a car payment in the Chapter 13 Plan. Priority debs such as child support and taxes are also included in the Plan payment. Unsecured debts, such as medical bills, credit card debt, and pay day loans will not be paid unless the client has enough income or property to include these debts in the Chapter 13 Plan. Dischargeable unsecured debts will be discharged when the case is completed. When a debt is discharged a creditor cannot take action to collect because collection is barred by Court Order. Non-dischargeable debts, such as student loans, will be paid directly by the client when the case is over.
At the end of the Chapter 13 Bankruptcy, a successful client will be current on their secured and priority debts. Dischargeable unsecured debts are discharged and the client is no longer required to pay them. This gives the client a fresh financial start.