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  • What Are Your Obligations As A Debtor?

    • By: Kindlund Legal LLC
    • Published: January 7, 2021

    When struggling with debt, you want to know your options for getting out of it. Bankruptcy is one of the many possibilities available to you. In specific, Chapter 13 bankruptcy offers you a way out. 

    But as a debtor who files Chapter 13 bankruptcy, you have obligations to fulfill. What are they? 

    Prioritizing your debts

    The United States Courts examine all you need to know about Chapter 13 bankruptcy, including your obligations as a debtor. Your primary obligations all revolve around repaying the creditors. Chapter 13 bankruptcy lets you create a 3 to 5 year repayment plan. During this time, you must repay all debts through monthly or bimonthly payments. 

    You must prioritize payments in a certain way, though. First, prioritize administrative fees. You must pay them all in full. Next are priority debts, which include alimony, owed wages and child support. Note that you must also keep current with secured debts exempt from bankruptcy. This includes mortgages, home equity loans and personal loans. 

    What happens after you pay priority debts?

    After priority debts, you must pay all other secured debts in full. Tax liens and statutory liens fall under this category. Next, you pay unsecured creditors. You owe them an amount equal to nonexempt property. All disposable income goes toward this expense. This category includes credit card debt and union dues. 

    Your final obligation is to stick with the plan you create. There is no second chance if you cannot repay debts under a Chapter 13 bankruptcy plan. As such, it is important to craft a realistic plan and stick with it.

    Jillian Kindlund

    Call Now For A Complimentary Case Evaluation
    (240) 997-5775
    Former Chapter 7 Trustee

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