How are my creditors paid?

The money you pay to the Trustee is used to pay your creditors, your attorney’s fees, if any, and the Trustee’s fees.  Creditors have 90 days from the first meeting of creditors to file a proof of claim with the U.S. Bankruptcy Court.  Government agencies have 180 days from the first meeting of creditors to file a proof of claim.  The Trustee can only pay those creditors who file a proof of claim with the U.S. Bankruptcy Court.

Creditors fall into three basic categories: Priority (income taxes, past due child support, real estate taxes); Secured (mortgages, auto loans); and Unsecured (credit cards, medical expenses).

Unless your plan specifically provides for a different order of distribution, the Trustee will pay the unpaid balance owed to your attorney first; then the priority creditors are paid in full, the secured creditors will then be paid in full, and finally, the unsecured creditors are paid.  Payments to your creditors will begin after the Bankruptcy Court has confirmed your case.