What happens to unsecured debts in a Chapter 13 bankruptcy filing?

When you file for bankruptcy under Chapter 13, you must propose a repayment plan to pay off some or all of your debt over time (three to five years). You must pay off certain debts in full, including child support, back taxes, and the administrative costs of your case. 

If you want to keep property securing a debt, you must also pay off your arrearages in your Chapter 13 plan. For example, if you want to keep your car but you've missed a couple of payments, you can include those payments in your plan and make them up over time. As long as you also stay current on your monthly payments, you'll get to keep your car. 

How much of your other debts -- your unsecured debts that don't receive priority in bankruptcy -- must be paid depends on your assets and your income. Here's how it works:

• You must devote all of your disposable income -- what's left after paying certain allowed monthly expenses -- to your repayment plan. 
• The amount your unsecured creditors receive through your plan must be at least what they would have received if you had used Chapter 7. In Chapter 7, these creditors would have gotten a share from the proceeds of the sale of your nonexempt property. So, if you own property that isn't protected by an exemption, you must pay at least its value in your plan. 

As long as your plan meets these requirements and you make all required plan payments, your unsecured, nonpriority debts will be discharged at the end. This is so whether your plan repays these creditors in full, in part, or not at all. The repayment amount depends on your situation, not on how much you owe. As long as you diligently pay in all of your disposable income each month, and these creditors are left no worse off than they would have been if you had used Chapter 7, these debts will be discharged.