In order to get reimbursed during a Chapter 13 Bankruptcy, a creditor needs to file a proof of claim to the court. A proof of claim can be a contract, invoice or other document that shows a debt is owed. Claims are paid when the debtor pays into the Chapter 13 payment plan. The debtor pays a lump sum and the Bankruptcy Trustee disperses the funds to each creditor based on priority. The highest priority claim is child support.
If a debtor files Chapter 7 Bankruptcy, most likely, any unsecured debt will not be repaid. All secured debt will be paid in a Chapter 7 case is when any collateral is sold. Some secured items are exempt or protected from the claims of creditors and the debtor's can keep it. There are certain exemptions in a Bankruptcy case. Contact us online or call the Law Offices of Jacoby & Jacoby at 631-289-4600 to schedule a FREE consultation and we can go over your individual situation and discuss what would apply to you.