Who Gets Paid
As Chapter 13 functions as a payment plan, the general answer to the question “do my creditors get paid when I file Chapter 13?” is “yes.” However, not every creditor gets paid in full and some creditors are paid before others.
In a Chapter 13, creditors within the same “class” get paid at the same rate. Creditors in Chapter 13 can be:
- priority creditors – like recent tax debt, child support and certain salary claims by employees
- secured creditors – like mortgage lenders, car lenders, furniture and jewelry lenders, and judgment creditors – creditors whose claims are secured by property
- unsecured creditors – like credit card lenders, medical providers, signature loans
In addition, some unsecured creditors get special treatment – such as credit card debt where there is a co-signer, or student loan debt.
Priority creditors almost always get paid in full, secured creditors usually get paid in full or at least to the extent of the value of the collateral securing the loan and unsecured creditors get paid anywhere from 1 penny on the dollar to 100 cents on the dollar depending on a variety of factors.
Generally secured creditors get paid first, followed by unsecured creditors and priority creditors. However, every case is different and your attorney will guide you as to the appropriate payment schedules for your case.
The Chapter 13 plan that your Clark & Washington lawyer will draft and submit to your trustee and judge will provide for specific payments to your creditors. We will set out actual dollar amounts that many of your creditors will be paid.
The calculations that go into developing a confirmable Chapter 13 plan can be complicated and require the input of an experienced Chapter 13 lawyer who understands both the Bankruptcy Code requirements as well as the Local Rules that apply in the Northern District of Georgia. You can feel confident with Clark & Washington by your side.