In the typical case unsecured debts get paid pennies on the dollar, if they get paid anything at all. Generally, unsecured creditors only receive a significant dividend in the following situations: (1) there exists assets that are not fully exempt; (2) you are trying to protect a co-signer; or (3) you make above the median income and the means test requires that you pay a fixed amount to your unsecured creditors.
Priority unsecured creditors (such as child support, alimony and most tax debt) will typically need to be paid over the length of your chapter 13 plan. Chapter 13 will also allow you to catch up on past due secured debts (such as house and car payments) over a period of up to 5 years. In many cases you can also pay off secured debt based on the value of the property securing the debt, rather than the amount owed to the creditor.
There is considerable flexibility and complexity in formulating and proposing a chapter 13 plan which needs to be based on a client’s specific facts and goals. Please feel free to call today to discuss your options in this regard. (919) 875-8773.
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