Chapter 13 plan - sustany/dvg GitHub Wiki

Chapter 13 of the�United States�Bankruptcy�Code�allows individuals with regular income to develop a plan to repay some or all of their debts. Debtors are required under this chapter to propose a repayment plan to make installment payments from the debtor�s future income over a span of�three to five years. If the debtor's monthly income is less than the state median, the plan will be for three years unless the court approves a longer period "for cause." However, if the debtor's monthly income is greater than the state median, the plan generally must be for five years. Monthly income�is measured as the�average monthly income the debtor received over the six calendar months prior to the commencement of the case.

Under the�statute, the debtor (and�only the debtor) may propose a�chapter 13 plan. Generally, the debtor�must�file the plan when the case commences or within 14 days afterwards. A repayment plan must detail a schedule of payments of fixed amounts to the trustee on a regular basis, usually biweekly or monthly. Unlike a chapter 7 liquidation, a chapter 13 plan generally uses the debtor�s�income rather than assets�to pay various creditors. And unlike a liquidation under chapter 7, a chapter 13 plan allows a debtor to retain the collateral for the claims of creditors and pay off long-term debts, such as a�mortgage for a home. The payments are made to the�chapter 13 trustee�who then distributes them to creditors in accord with the�confirmed�plan.

Unlike a chapter 11 reorganization plan, a chapter 13 plan�does not allow�creditors to vote on a chapter 13 plan. If finalized and�confirmed, the plan will discharge the debtor�s�many debts. Depending on the case, the plan may call for full repayment or�offer creditors a percentage�of their claims.

However, the plan may fail to adequately compensate the creditors, either by design or by the debtor�s failure to complete the plan. In that event, the debtor can convert the case into a chapter 7 proceeding or seek a hardship discharge under�Section 1328(b). Alternatively,�a party�with an interest�may object�to confirm a proposed plan�if it does not conform�with the Bankruptcy Code�s requirements. Similarly, the�court will dismiss�the case if the debtor fails to comply with the plan.�