What Are Chapter 13 Priority Claims?
The goal of Chapter 13 bankruptcy is to help you create a payment plan so that you can pay off part or all of your debt during the next three to five years.
But how do you determine whether you have to pay a creditor in full instead of settling for pennies on the dollar during a Chapter 13 bankruptcy plan.
Well, that largely depends on the kind of debt that we're talking about.
There are some kinds of financial obligations labeled as priority claims.
These kinds of debts must be paid off completely during the repayment plan.
Some types of priority claims include child support obligation and back taxes.
If you have these kinds of financial concerns, then you will need to create a payment plan in which you pay off these priority claims completely.
If you are not able to do so, you may not qualify for Chapter 13.
What are some other eligibility requirements for Chapter 13? Well, for one thing, there is a maximum amount of debt.
To qualify for Chapter 13, you should not owe more than $922,975 in secured debts.
You should also not have more than $307,675 in unsecured debt.
If you're wondering about the difference between secured debts and unsecured debts, it's actually pretty simple.
A secured debt means that there is an asset that can be repossessed such as your car or your house.
Unsecured debts, such as credit cards, are not backed up by any collateral.
Your eligibility for this kind of bankruptcy and the exact terms that you are given also depend on your recent filing history.
If you have filed with a bankruptcy court for any kind of relief during the last few years, this may change your situation considerably.
If you were given a discharge recently, you'll be treated differently.
How so? Well, assuming you qualify for another discharge to begin with, you'll probably have to pay off all of your debt to the creditors during a repayment plan instead of simply settling for a fraction of the cost.
But how do you determine whether you have to pay a creditor in full instead of settling for pennies on the dollar during a Chapter 13 bankruptcy plan.
Well, that largely depends on the kind of debt that we're talking about.
There are some kinds of financial obligations labeled as priority claims.
These kinds of debts must be paid off completely during the repayment plan.
Some types of priority claims include child support obligation and back taxes.
If you have these kinds of financial concerns, then you will need to create a payment plan in which you pay off these priority claims completely.
If you are not able to do so, you may not qualify for Chapter 13.
What are some other eligibility requirements for Chapter 13? Well, for one thing, there is a maximum amount of debt.
To qualify for Chapter 13, you should not owe more than $922,975 in secured debts.
You should also not have more than $307,675 in unsecured debt.
If you're wondering about the difference between secured debts and unsecured debts, it's actually pretty simple.
A secured debt means that there is an asset that can be repossessed such as your car or your house.
Unsecured debts, such as credit cards, are not backed up by any collateral.
Your eligibility for this kind of bankruptcy and the exact terms that you are given also depend on your recent filing history.
If you have filed with a bankruptcy court for any kind of relief during the last few years, this may change your situation considerably.
If you were given a discharge recently, you'll be treated differently.
How so? Well, assuming you qualify for another discharge to begin with, you'll probably have to pay off all of your debt to the creditors during a repayment plan instead of simply settling for a fraction of the cost.
