Chapter 13 Repayment Plan

Understanding plan mechanics under 11 U.S.C. Sections 1322 and 1325

Mortgage Cure -- 1322(b)(5)

One of Chapter 13s most powerful tools. You can cure mortgage arrears over the life of the plan while resuming regular payments. This stops foreclosure and lets you keep your home.

The arrears are spread over 3-5 years. Regular mortgage payments continue outside the plan (paid directly to the lender).

Vehicle Cramdown -- 506(a)

If your car is worth less than the loan balance, you can "cram down" the secured claim to the vehicles current market value. The remainder becomes unsecured debt (paid at a fraction or 0%). The 910-day rule: cramdown is not available for vehicles purchased within 910 days (about 2.5 years) of filing.

Lien Stripping

If your home is underwater (first mortgage exceeds property value), you can strip off junior liens (second mortgages, HELOCs) entirely. The junior lien becomes unsecured debt. Upon plan completion, the lien is voided. This is only available in Chapter 13, not Chapter 7.

Surrender

You can surrender collateral (car, house) through the plan and treat any deficiency as unsecured debt. This is sometimes the best option if the property is worth significantly less than the debt.

Learn about lien stripping

Lien Stripping Guide

Related Resources

Section 1328 Discharge -- Chapter 13 discharge rules and the superdischarge

Lien Stripping -- How to remove underwater junior liens in Chapter 13

Hardship Discharge -- Section 1328(b) discharge when you cannot complete your plan

Federal Rules Committee

This research supports Suggestion 26-BK-3 to the Advisory Committee on Bankruptcy Rules

Proposing automated Section 1328(f) discharge bar screening in federal bankruptcy courts