Maywood Bankruptcy Attorney States That Not All Creditors Are Equal

Under the United States Bankruptcy Code and according to Maywood bankruptcy attorney, you do have the ability to divide unsecured creditors into classes.  In my experience however, in the Northern District of Illinois, the judges do not like to confirm plans that treat unsecured creditors differently with the one exception of there being a cosigner. 

If you have a debt where there is a cosigner, you can pay that debt 100% back to prevent the creditor from going after the code debtor.  However, if a debt is simply a non-dischargeable debt such as a student loan or a parking ticket, then you really can’t in this jurisdiction pay it back any different than other creditors that are dischargeable. 

So what I tell my clients is basically you are going to be paying a certain percentage back to your unsecured creditors.  If, in that mix you have something such as a student loan or a recent tax debt that is not going to be paid back 100%, then you can decide to pay the remaining portion after your bankruptcy case is over.  Many people have filed Chapter 13 bankruptcy cases to restrict student loans from garnishing or seizing assets and they are able to pay back those student loans 10% through the Chapter 13.  However, those clients know very well that after the 13 is over, they are going to of the other 90% of that student loan plus interest.  In some jurisdictions you might have better luck paying creditors a certain percentage and other unsecured creditors a different percentage.  In my experience here in the Northern District of Illinois, you must treat all unsecured creditors the same except for the situation where you have a debt that is cosigned.  

The Bankruptcy Code is ever flowing and the interpretation is ever flowing so you might have situations where some judges are making exceptions based on good cause shown.  However, plan on paying all unsecured creditors the same percentage under your Chapter 13 bankruptcy case.

 

 

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