What Is The Basis Of A Chapter 13 Plan?

In order for a Chapter 13 bankruptcy plan to be approved by the court, the plan must require the debtor to pay to the Chapter 13 trustee an amount equal to the debtor’s disposable income (that is, the portion of income remaining after all reasonable and necessary living expenses) for a period of at least 36 months. More often than not, Chapter 13 plans are only for a partial repayment of debt. The plan must also provide that the payments to the creditors are at least as much as they would have received had the bankruptcy been a Chapter 7 filing. In that sense, the amount to be repaid to creditors is based on the debtor’s income and assets. Finally, the debtor’s plan needs to be filed in good faith, meaning the debtor’s intentions are to make payments, make them on time, and not default.

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