When a person files Chapter 13 bankruptcy, the trustee will examine their debts for what is known as “priority debt.” These are debts which, by law, cannot be reduced in bankruptcy. They include:
- Taxes
- Child support
Because they cannot be reduced, a person will be required to pay back the full amount. However, Chapter 13 will allow them more time to pay this debt back and stop all collection activities against them. It will also allow them pay back little, if any, unsecured debt. A St. Louis Chapter 13 Bankruptcy Attorney can examine your debts to explain which are priority debts and which are unsecured debts.
Unsecured debt in Chapter 13 can often be reduced significantly, depending on a person’s particular financial situation. These debts include such things as credit card debt, medical bills, etc. The amount a person will pay during Chapter 13 will be based on their monthly disposable income. Priority debt, as the name implies, will be paid first from that monthly payment. The remainder will be distributed pro rata between the remaining unsecured creditors. This means that a St. Louis Chapter 13 Bankruptcy Attorney will help a person pay pennies on the dollar in getting this debt discharged.
Understanding your financial situation is vital to understanding which bankruptcy is right for you. An experienced St. Louis Chapter 13 Bankruptcy Attorney will look at all areas of your financial life, including the type of debts owed, monthly income, and number of assets, to determine the best course of action for dealing with unmanageable debt
For a free consultation regarding your debt situation, contact The Westbrook Law Group. Together, we will find a solution to your debt problems and help you get the fresh start that bankruptcy offers. To get a new lease on life that is debt free and stress free, contact us today.
