When you file Chapter 13 bankruptcy in New York, you will have to create a repayment plan. This plan sets out a schedule for repaying your creditors. Your plan may not repay every creditor nor may it repay each debt fully. However, your plan will need to follow the courts rules on priority debts.
The U.S. Courts explains priority debts are those that take precedence over other debts. You have three types of claims for debts. Priority debts have a special legal status. They include the costs of your bankruptcy fees, taxes and other important debts, such as child support. You will need to pay back 100% of these debts.
The next level includes secured debts. These are those debts you secured by putting up collateral. The best examples are a car loan, which you secure with the car you buy, and a mortgage, which you secure with the home. You must pay back the value of the collateral on these debts.
If you have room in your budget to pay more debts, you will pay the third level, which is unsecured. These include credit cards. You may not end up paying anything on these obligations if your income is too low.
You must allot all your disposable income to your repayment plan. This excludes the money you need for household expenses and other regular living expenses. Your plan should address debts by level of priority to ensure you can fully pay priority debts and any secured debts for which you want to keep the collateral. This information is for education and is not legal advice.