Chapter 13 plan payment · Beverly Hills
How a Chapter 13 Plan Payment Is Calculated
A Chapter 13 plan payment is calculated by adding up what the law says the plan must pay: past-due mortgage or car amounts, priority debts like recent taxes, the trustee's fee, any attorney fee balance and a share for unsecured creditors. The plan runs three or five years. Call (310) 362-9071 and we will build an estimate with you.
- One monthly payment goes to the Chapter 13 trustee
- Plans last 3 years (below median income) or 5 years (at or above median)
- Your first payment is due within 30 days after you file
At a glance
The parts of a Chapter 13 plan payment
Your plan payment in Chapter 13 bankruptcy is a total of several pieces. Some pieces are set by law. Others depend on your income and what you own.
- Secured arrears. If you are behind on your mortgage, the missed amount is spread over the plan. This is how Chapter 13 can cure mortgage arrears and stop a foreclosure. Your regular monthly mortgage payment usually stays outside the plan.
- Car payments. A car loan can be paid through the plan. In some cases the balance can be reduced to the car's value. See car loan cramdown and the 910-day rule.
- Priority debts. Recent income taxes and past-due child support or alimony must be paid in full through the plan.
- Attorney fee balance. Most of the Chapter 13 attorney fee is paid through the plan, not up front. We quote your Chapter 13 fee in writing.
- Trustee fee. The trustee takes a percentage of each payment to run the case. The rate is set by the U.S. Trustee Program and can change.
- Unsecured share. Credit cards, medical bills and other unsecured debts get whatever is left under the two tests below.
The two tests for unsecured creditors
Unsecured creditors must get at least the larger of two numbers.
- The disposable income test. If your income is above the California median income, a federal formula sets your monthly disposable income, much like the means test. That amount goes to the plan for the full term. If you are below the median, the court looks at your actual budget.
- The liquidation test. Unsecured creditors must get at least what they would get if you filed Chapter 7 and the trustee sold your non-exempt property. If you have equity above your bankruptcy exemptions, your plan must pay at least that much.
Many plans pay unsecured creditors only a small part of what they are owed. The rest is discharged when you finish.
Three years or five years
Plan length depends on your income. If your household income is below the California median for your household size, the plan is usually 3 years. It can run longer, up to 5 years, for a good reason, such as needing more time to catch up a mortgage. If your income is at or above the median, the plan must be 5 years unless you pay unsecured creditors in full sooner.
A longer plan can lower the monthly payment when the total owed is fixed, such as mortgage arrears. No plan can run longer than 5 years.
A simple example
These are round numbers for illustration only. Your numbers will be different.
| Part of the plan | Total over 5 years | Per month |
|---|---|---|
| Mortgage arrears | $30,000 | $500 |
| Priority income tax | $6,000 | $100 |
| Unsecured creditors | $6,000 | $100 |
| Trustee fee | Added on top as a percentage | Varies |
In this example, the payment before other costs is $700 a month. Any attorney fee balance and the trustee's percentage are then added. Your regular mortgage payment is paid separately each month.
How you pay the trustee
You pay the Chapter 13 trustee, not each creditor. The trustee then pays creditors under the plan. Common ways to pay include a payroll deduction, where your employer sends the payment, or an approved online or electronic payment method. The trustee's office gives instructions after you file.
Start paying within 30 days after you file, even before the plan is confirmed. Missed early payments are a common reason for Chapter 13 dismissal. If your income changes later, you can ask for a plan modification.
What to watch for
- A budget that is too tight. A plan with no room for car repairs or medical bills often fails.
- Forgetting the regular mortgage payment. You pay it on top of the plan payment in most cases.
- Missing tax returns. Unfiled returns can hold up confirmation and add priority tax claims.
- Not reporting a raise. The trustee may review your income each year and can ask for more.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on Chapter 13 bankruptcy
- Chapter 13 bankruptcy in Beverly Hills
- Chapter 13 Eligibility and Debt Limits
- How a Chapter 13 Plan Payment Is Calculated
- Car Loan Cramdown and the 910-Day Rule
- Changing a Chapter 13 Plan After Filing
- Why Chapter 13 Cases Get Dismissed and How to Avoid It
- Chapter 13 Hardship Discharge
- The Co-Debtor Stay: Protecting a Co-Signer
- Mortgage arrears cure plan
- Second mortgage lien stripping in Chapter 13
- Converting Chapter 13 to Chapter 7
Chapter 13 plan payment questions
How is my Chapter 13 plan payment calculated?
Your Chapter 13 plan payment is calculated by adding mortgage or car arrears, priority debts, the attorney fee balance, the trustee's fee and the share owed to unsecured creditors, then spreading the total over 3 or 5 years.
Do I still pay my mortgage separately in Chapter 13?
Yes, in most cases you still pay your regular mortgage payment separately in Chapter 13. The plan pays only the past-due amount.
Is there a minimum Chapter 13 plan payment?
There is no single minimum Chapter 13 plan payment. The payment must be large enough to cover what the law requires, and that depends on your debts, income and property.
When is my first Chapter 13 payment due?
Your first Chapter 13 payment is due within 30 days after you file. You keep paying while the court reviews the plan.
Can my plan payment go down later?
Yes, your plan payment can go down later if your income drops. You ask the court to modify the plan. Act quickly, before you fall behind.
Free consultation
Get a plan payment estimate
Call (310) 362-9071 or send the form. Bring pay stubs and your mortgage statement and we will estimate your Chapter 13 payment with you for free.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.