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Are all unsecured creditors on equal footing with regard to repayment in a Chapter 13 plan?

Except for certain exempt categories of debts such as alimony and student loans, all unsecured creditors are on equal footing regarding their rights to object to a plan, i.e. they may object to a plan but, unlike secured creditors, are not entitled to demand a certain amount of money.

Unsecured creditors are not on equal footing with regard to priority, however. The court is permitted to approve a plan in which some unsecured creditors receive a larger percentage of the amount owed to them than other unsecured creditors receive. These distinctions are typically made by sorting the unsecured debts into categories and assigning priorities to the various categories. Thus, some unsecured creditors may receive most or all of the money owed to them while other unsecured creditors receive almost nothing.

Barry Rosenzweig
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Barry Rosenzweig, has 25 years experience as an attorney helping clients solve their legal problems.