What is the Repayment Plan Like in Chapter 13 Bankruptcies?

Under Chapter 13, bankruptcy law requires the repayment of some debts in full and others in part.

Debts that must be paid in full include:


Priority debts:


1. Unsecured debts, such as child support, alimony or support payments, and non-dischargeable taxes.


2. Secured debts that survive the repayment plan: Secured debts, such as a mortgage or a vehicle loan, must remain current during the repayment plan, if you are going to keep the property.


3. Other secured debts: Secured debts, like judicial and tax liens, must be paid in full during the repayment time. You should consult with bankruptcy counsel to discuss which specific debts fall in this category.


Repayments to Unsecured Creditors:

Non-priority, unsecured creditors may also be entitled to repayment. Because a debtor may keep nonexempt property under Chapter 13 bankruptcy, a debtor must repay non-priority, unsecured creditors at least the amount equal in value to their nonexempt property over the life of the repayment plan.


Exempt property typically includes:

  • household appliances
  • furniture
  •  inexpensive jewelry
  • certain amount of equity in a home or motor vehicle.


(It is important to consult with bankruptcy counsel in your state to learn the specific values of exemptions.)


A debtor may include income from a working spouse even if the spouse has not filed jointly for bankruptcy, wages and salary, self-employment income, Social Security benefits, and unemployment benefits. To qualify for Chapter 13, the debtor must have enough income for expenses, for mandatory payments to priority and unsecured creditors, and for payments to unsecured creditors in an amount at least equal in value to the debtor’s nonexempt property. It will be necessary to demonstrate that the requisite figures properly add up before the debtor will be allowed to go forward with the Chapter 13 reorganization.


In Albuquerque, Giddens & Gatton Law, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases in New Mexico. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, P.C. at (505) 633-6298 to set up an appointment with one of its New Mexico bankruptcy lawyers or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.