How is a Chapter 13 Plan Payment Calculated?
September 7, 2025
Chapter 13 Bankruptcy: Frequently Asked Questions
The following responses are intended as general information and should not be taken as legal advice. For more information consult with an experienced bankruptcy attorney.
What is a chapter 13 bankruptcy case and how does it work?
In a chapter 13 reorganization, the debtor pays back a portion or in rare cases all of their debts. Chapter 13 plan payments can be as little as $100/month or much higher (several thousand) depending on income, household size, and whether there are debts which must be paid back in full such as mortgage arrears and priority tax debts. You will make payments directly to the Chapter 13 trustee, who will then distribute the payments to your creditors according to the repayment schedule confirmed by the court. Your attorney will submit a plan for approval. If there are objections by creditors or the trustee, the attorney must resolve those objections before the court will approve the plan. In many cases, your attorney will submit an original plan and one or two amended plans before confirmation. The duration of the plan is three to five years and depends on your income. If you are below median income, you will usually be in a three year plan.
What is the main difference between a chapter 13 and 7 bankruptcy?
A chapter 7 is a straight discharge without repayment plan. A debtor does not make payments in a chapter 7 case, however, non-exempt assets (if any) will be liquidated. In a chapter 13, a debtor makes payments to the bankruptcy trustee before receiving a discharge. There is no liquidation of assets in a chapter 13. In a chapter 7, some of your property may be liquidated (additional vehicles, boats, rental homes, a portion of next year’s tax refunds) before you receive a discharge. In most cases, the majority of a debtor’s property is exempt from turn-over.
When is a Chapter 13 bankruptcy case preferable to a Chapter 7 bankruptcy case?
Some debtors may not qualify for a chapter 7 because of a previous bankruptcy or because their income is too high. Chapter 13 bankruptcy may be preferable to someone who has property which would be liquidated in a chapter 7 bankruptcy (e.g. rental property with equity). Finally, a person may have debts which would not be discharged in a chapter 7 bankruptcy but which can be discharged or provided for in a chapter 13.
Does the bankruptcy means test apply to a chapter 13?
Yes, the means test calculation (Form 22B) determines two things in a chapter 13 including: whether the repayment duration will be three years or five years and it determines the minimum distribution to unsecured creditors such as credit cards, medical, pay day loans, etc.
How is chapter 13 different from credit consolidation?
There are two important differences. First, your creditors are forced into a Chapter 13 bankruptcy once you file and cannot opt out. Otherwise, some creditors may not agree to take part in a consolidation program particularly medical creditors. The second critical difference is that a chapter 13 bankruptcy is a ‘best efforts’ repayment plan. Most debtors pay just a fraction of their debt back in a chapter 13 and the remaining balances are discharged. A consolidation requires that you pay back all of your debts at a reduced interest rate that is negotiated by your agent.
When does one receive a chapter 13 discharge?
You must complete all of your plan payments to receive a discharge in chapter 13; otherwise the trustee will file a motion to dismiss the case. If you experience financial hardship during your repayment plan, your attorney can request a reduced payment or you may be a candidate for a chapter 7.
What does the chapter 13 trustee do?
A chapter 13 trustee is a person appointed by the United States Trustee to administer chapter 13 bankruptcies. The trustee represents the best interests of your unsecured creditors and may object to a proposed plan if the trustee believes the debtor is not making fair payments to creditors. A debtor makes payments to the trustee who then mails checks to the creditors based on the terms of the plan. Some debts are paid before others such as mortgage arrears and tax debts. The unsecured creditors receive payments on a pro-rata basis.
How much will I have to pay each month?
There are many factors which will affect your payment amount. If you have a mortgage that is behind on payments and you want to keep the home, you must pay back all of the missed payments (arrears) during the plan. Therefore, your payment must be large enough to provide for the arrears in full. Certain tax debts must also be paid back in full. In most cases, it is not required that the unsecured debts be paid back in full. Your income and household size determine how much, if any, your unsecured creditors must be paid.
What are the eligibility requirements for a chapter 13?
Anyone who resides in the U.S. may file a Chapter 13 bankruptcy case. Debtors must have regular income (certain commission-based earners may not qualify), unsecured debts of less than $394,725, and secured debts of less than $1,184,200. If your debts exceed these limits, you may consider filing under chapter 11. To file under chapter 13, you must not be a stockbroker or commodity broker. You should not file a chapter 13 if you intentionally dismissed another bankruptcy case within the last 180 days. Prior bankruptcy discharges may affect eligibility for a discharge.
What responsibilities does my attorney have in a chapter 13?
The following services are Basic Services common to most Chapter 13 cases.
- Meet with the debtor(s) to review and analyze the debtor(s)’ financial situation.
- Counsel the debtor(s) on whether filing bankruptcy is appropriate, and whether to file Chapter 7 or 13.
- Advise the debtor(s) of their statutory obligations pre- and post-confirmation.
- Evaluate the timing of filing.
- Evaluate conflicts of interest.
- Explain fees and provide a copy of Exhibit A of Basic Services.
- E-file documents if required.
- Analyze eligibility for discharge.
- Prepare and file schedules, statements, and Form B22C.
- Assist the debtor(s) in formulating a budget and Chapter 13 plan.
- Respond to creditor inquiries.
- Provide information to the Chapter 13 trustee.
- Advise regarding the automatic stay.
- Take appropriate stay-related actions.
- Appear at the §341 meeting of creditors.
- Review claims before confirmation and account for them in the plan.
- Negotiate with the Chapter 13 trustee.
- Prepare and file amendments to schedules and plans.
- Obtain lien searches and file motions to avoid liens where applicable.
- Represent the debtor(s) at Rule 2004 exams.
- File or object to proofs of claim as needed.
- Prepare responses to motions and appear at hearings.
- Represent the debtor(s) in the confirmation process.
- Prepare proposed orders and required notices.
- Comply with all applicable bankruptcy rules and code sections.
Do judgments go away when I file for chapter 13 bankruptcy?
It is possible to remove a judgment lien in a chapter 13 case through a motion under 11 USC 522(f). Whether the lien will be removed depends on whether it impairs the homestead exemption. An attorney must handle this process.
How will filing bankruptcy affect my credit?
Both chapter 7 and chapter 13 will negatively impact your credit temporarily. Chapter 13 is sometimes viewed more favorably because payments are being made. Many debtors begin rebuilding credit while in chapter 13.
Will my friends, family or employer find out I’ve filed for chapter 13 protection?
It is unlikely unless they search public records. Trustees rarely contact employers unless required.
Will potential employers discriminate against me for filing bankruptcy?
It is unlawful for employers or government agencies to discriminate based on bankruptcy filing.
Under chapter 13, which property can I keep?
Chapter 13 is not a liquidation. You keep your property but must meet the chapter 7 “best interest of creditors” test.
Is there a court meeting?
Yes. The debtor must attend the §341 meeting of creditors approximately 40 days after filing. The confirmation hearing is attended by the attorney, and the debtor may be required to appear if contested.
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