Chapter 13 bankruptcy deals with debt differently than the chapter 7 bankruptcy does. With a chapter 13 bankruptcy your debts and payments of them are reorganized into a payment plan. This plan usually runs for a period of 3 to 5 years. When it comes to your credit card debt, the bankruptcy courts will decide what level of priority they take in regards to repayment. In most cases credit card debt has the lowest priority because it is not a secured debt.
Dealing With Debt
In a Chapter 13 bankruptcy all of your debts are classified into categories. There are general unsecured debts that you have. Then unsecured debts that take priority, and then secured debts. Secured debts are those which the creditor has some type of security against the debt. For example, your car. The security here is if you don’t pay then the creditor takes back the vehicle.
With your credit card debt there is no security, so the credit has nothing to repossess in lieu of the money owed. It may turn out that under the Chapter 13 bankruptcy payment plan you will have to make some payments on your credit card debt but most likely not enough to totally clear the debt out. While the main focus is put on the secured and priority debts if there is enough money left over, then this is divided into payments for the credit card debt.
Knowing how the debts are going to be handled and working out a repayment plan can be confusing and it is wise to use the services of a Houston bankruptcy attorney to help you with your bankruptcy proceedings.