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.

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