Requirements of a Chapter 13 debtor’s repayment plan
To be confirmed, the Chapter 13 debtor’s repayment plan must:
- Pay priority creditors in full.
- Pay secured creditors the full value of their claims.
- Pay the debtor’s net disposable income to the Chapter 13 trustee for a period of at least three years.
- Pay unsecured creditors at least as much as they would receive in a Chapter 7 liquidation.
- Be proposed in good faith.
- Provide for Trustee’s compensation, a percentage of plan payments.
- Be feasible.
The plan is filed with the petition or within 14 days thereafter. Unlike Chapter 11 proceedings, creditors in a Chapter 13 case need not approve the plan (except secured creditors in some cases) and must file a creditors’ claim. The plan has a 3-year duration if the debtor’s income is below the state median. In no event may the court approve a plan with a duration longer than five years. Only the debtor may file the plan.The contents of the plan must:
- Provide that the debtor submit to the trustee that portion of his or her earnings necessary for execution of the plan.
- Provide for full payment of all claims entitled to priority.
- If the plan provides that all of the debtor’s projected disposable income is due under the plan, the plan may provide for less than full payment of all amounts owed for a priority claim.
- Provide for the same treatment for each claim within a particular class if the plan classifies claims.
In addition, the plan may:
- Designate classes of unsecured claims.
- Modify the rights of secured creditors, except the mortgage holder of debtor’s principal residence.
- Provide for a curing or waiving of a default.
- Provide that payments made on an unsecured claim be made concurrently with payments on secured claims.
- Provide for assumption, rejection or assignment of an executory contract.
- Allow repayment of retirement loans from payroll withholding.
- Provide for the payment of interest on tax claims.
- Include any other provision the court may allow.