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The # 9 reason for choosing to file a Chapter 13 bankruptcy is that you may not have to pay back anything to general unsecured creditors.
The amount you have to repay your unsecured creditors is now dictated by the Bankruptcy Code. You can now do a Chapter
13 with a “0” percent pay-back to the unsecured creditors in some circumstances.
A Chapter 13 plan can be used to pay the Chapter 13 Trustee, the legal fees and the secured debts for
the property the debtor really wants to keep and may not require any repayment to the credit card
debts or other obligations. This is the same that you would probably spend in a Chapter 7 bankruptcy
but lets you keep your assets.
A Chapter 13 repayment plan can provide that the money paid through the chapter 13 Plan is to be
applied by the creditors to pay down the balance of the debt that existed as of the date of filing.
For example, unsecured claims (like credit card obligations) are frozen as of the filing date. Even more importantly, unsecured priority debt such as tax obligations owed to the Internal Revenue Service and the Commonwealth of Massachusetts Department of Revenue are frozen as of the filing date and can be repaid through the Plan.
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