Chapter 13 Payment Calculator

How Chapter 13 Plan Payments Work

A Chapter 13 bankruptcy plan is a court-supervised repayment program lasting 3 to 5 years. Unlike Chapter 7, which eliminates most unsecured debt in a few months, Chapter 13 requires you to repay creditors from your future income according to a structured plan.

Your monthly plan payment is sent to a Chapter 13 trustee, who distributes it to your creditors according to the priority rules set by the Bankruptcy Code. The trustee takes a percentage (typically 5-10%) as an administrative fee before distributing the remainder.

The core idea is straightforward: you pay what you can afford, and anything left over on unsecured debt is discharged when you complete the plan. But "what you can afford" is not up to you alone -- the court applies specific tests to make sure the amount is fair to both you and your creditors.

The Three Tests Every Plan Must Pass

Before a bankruptcy judge will confirm (approve) your plan, it must satisfy three key requirements under 11 U.S.C. Section 1325:

1. Feasibility test -- You must be able to actually make the proposed payments. The court looks at your income, expenses, and payment history. If your budget leaves no margin for emergencies, the court may reject the plan as not feasible.
2. Best interests test (Section 1325(a)(4)) -- Unsecured creditors must receive at least as much as they would get in a Chapter 7 liquidation. If you have nonexempt assets worth $5,000 that would be sold in Chapter 7, your plan must pay unsecured creditors at least $5,000 total.
3. Best efforts test (Section 1325(b)) -- If the trustee or any unsecured creditor objects, you must commit all of your "projected disposable income" for the applicable commitment period. This is the most common battleground in Chapter 13 cases.

Understanding Disposable Income

Disposable income is the single most important number in Chapter 13. It determines the minimum you must pay. The calculation is different depending on whether your income is above or below your state's median income for your household size.

Below-Median Debtors

If your current monthly income is below the state median, your disposable income is calculated using your actual, reasonable expenses. The court has more flexibility, and you can propose a 36-month plan. Your expenses must be "reasonably necessary" for the maintenance and support of you and your dependents, as determined by the court under Section 1325(b)(2).

Above-Median Debtors

If your income exceeds the state median, expenses are determined using IRS Local and National Standards -- the same standards used in the Chapter 7 means test. You must commit to a 60-month plan. This formula-based approach can sometimes allow more or fewer expenses than you actually spend.

Secured, Priority, and Unsecured Debt Treatment

Secured Debt

Secured debts are backed by collateral -- your home mortgage, car loan, or equipment liens. In Chapter 13, you must cure any pre-filing arrears (missed payments) over the plan term while maintaining ongoing regular payments outside the plan. For example, if you are $6,000 behind on your mortgage, that $6,000 must be paid through your plan over 36 or 60 months, on top of your regular monthly mortgage payment.

For some secured debts, you may be able to use cramdown to reduce the debt to the collateral's current value. This is especially valuable for car loans on underwater vehicles, though it does not apply to your primary residence mortgage.

Priority Debt

Priority debts must be paid in full through the plan. These include income tax debts from the last three years, past-due child support and alimony, and certain other claims designated as priority under 11 U.S.C. Section 507. You cannot discharge priority debts, so they must be paid 100% -- the only question is whether you pay them over 36 or 60 months.

Unsecured Debt

Unsecured debt -- credit cards, medical bills, personal loans, payday loans -- gets whatever is left after the trustee fee, secured arrears, and priority debts are paid. In many plans, unsecured creditors receive between 0% and 30% of their claims. Whatever balance remains after your plan completes is discharged.

What Happens When Your Situation Changes

Life does not stop during a 3-5 year plan. Job loss, pay raises, medical emergencies, divorce, and other changes can all affect your ability to make plan payments. The Bankruptcy Code provides several safety valves:

• Plan modification (Section 1329) -- You, the trustee, or an unsecured creditor can ask the court to modify the plan after confirmation. This can increase or decrease payments depending on changed circumstances.
• Hardship discharge (Section 1328(b)) -- If circumstances beyond your control prevent plan completion and unsecured creditors have already received at least what they would in Chapter 7, you may qualify for a discharge without completing the plan.
• Voluntary dismissal (Section 1307(b)) -- You can dismiss your Chapter 13 case at any time, but you lose the benefit of the automatic stay and any dischargeable debt remains.
• Conversion to Chapter 7 (Section 1307(a)) -- If you qualify, you can convert your Chapter 13 to a Chapter 7, which eliminates unsecured debt without continued payments.

Trustee Fees and Administrative Costs

The Chapter 13 trustee takes a percentage of every dollar that passes through the plan. This percentage varies by district but typically ranges from 5% to 10%. It is set by the U.S. Trustee's office under 28 U.S.C. Section 586(e) and is not negotiable.

Attorney fees are also paid through the plan in most districts. A typical Chapter 13 attorney fee ranges from $2,500 to $4,000, and this amount is deducted from your plan payments before creditors receive distributions. Some districts use "no-look" fee amounts -- pre-approved fee levels that do not require itemized billing.

These administrative costs mean that not every dollar of your payment goes to creditors. On a $500/month payment with a 10% trustee fee, only $450/month actually reaches creditors.

Frequently Asked Questions

How is my Chapter 13 plan payment calculated?

Your plan payment is based on your disposable income (monthly income minus allowed expenses), the amount of secured debt arrears and priority debt that must be paid in full, and any additional amount needed to satisfy the best interests of creditors test. The payment must be at least enough to cover secured arrears and priority debt over the plan length, and you must commit all projected disposable income to the plan under the best efforts test of 11 U.S.C. Section 1325(b).

What is the best efforts test in Chapter 13?

The best efforts test under Section 1325(b) requires that if the trustee or an unsecured creditor objects to your plan, you must commit all of your projected disposable income to the plan for the applicable commitment period. Disposable income is your current monthly income minus reasonably necessary expenses. If your income is above the state median, expenses are determined using IRS standards through the means test. This ensures you are paying as much as you can afford.

Can my Chapter 13 payment change after confirmation?

Yes. Under Section 1329, you, the trustee, or an unsecured creditor can request a plan modification after confirmation. Common reasons include job loss, income increase, new medical expenses, or changes in secured debt. The modified plan must still meet all confirmation requirements under Section 1325. Many districts allow informal payment adjustments through the trustee before requiring a formal modification.

What happens to unsecured debt in Chapter 13?

Unsecured creditors receive whatever is left after you pay trustee fees, secured debt arrears, and priority debts. Many Chapter 13 plans pay unsecured creditors between 0% and 30% of what they are owed. The remaining balance is discharged when you complete the plan. Under the best interests test of Section 1325(a)(4), unsecured creditors must receive at least as much as they would in a Chapter 7 liquidation.

Is 36 months or 60 months better for my Chapter 13 plan?

If your income is below the state median, you can propose a 36-month plan. If your income is above the median, you must commit to a 60-month plan. A shorter plan means higher monthly payments but less total paid over time. A longer plan means lower monthly payments but more total outlay. The applicable commitment period is set by Section 1325(b)(4) based on your income relative to the state median for your household size.