11 USC 1322: Chapter 13 Plan Requirements and Confirmation

A Chapter 13 repayment plan has to do three things at a minimum: commit enough of your future income to the trustee to fund the plan, pay every priority claim in full, and treat all claims within the same class identically. Beyond that floor, the Bankruptcy Code lets you use the plan to cure a mortgage default, reduce some secured debts to the value of the collateral, and protect co-signers, subject to important limits. The full set of Chapter 13 plan requirements comes from 11 U.S.C. § 1322, with confirmation standards layered on top by § 1325.

The Three Mandatory Provisions

Section 1322(a) sets the non-negotiable contents of every plan.

You have to submit enough of your future earnings or income to the Chapter 13 trustee to carry out the plan. The trustee collects your monthly payment and distributes it to creditors under the plan’s terms.¹

Every priority claim must be paid in full through deferred cash payments, unless the individual creditor holding that claim agrees to different treatment. Priority claims include domestic support obligations such as child support and alimony, along with certain tax debts.¹² The “unless the creditor agrees” opening rarely helps with support obligations, because family courts and support recipients have little reason to accept less.

If the plan sorts claims into separate classes, every claim inside a class has to be treated the same. You can’t quietly pay one credit card in full while leaving another in the same class with pennies on the dollar.¹

How Long the Plan Has to Run

Plan duration turns on the median-income comparison. Annualize your current monthly household income and compare it to your state’s median family income for a household of your size. If you’re at or above that median, the plan generally must last five years. If you’re below it, the default length is three years, and the court can approve a longer plan for cause. No plan can exceed five years under any circumstances.¹

For households larger than four, the statute adds $925 per month per additional person to the median comparison.³ The Department of Justice publishes the current state median figures used in bankruptcy filings.⁴

Paying off early is harder than most filers expect. You can’t just hit the total plan number ahead of schedule and walk. Early payoff requires paying debts in full, meaning the amount owed before filing plus interest and allowed fees, minus what’s already been paid. For most debtors that number is far higher than the sum of scheduled plan payments.

Optional Powers the Plan Can Use

Section 1322(b) is where the real leverage lives. Use these provisions or leave them out, depending on the situation.

Cramdown on Secured Debts

The plan can modify the rights of secured creditors by reducing a claim to the current value of the collateral. Owe $15,000 on a car worth $9,000? The plan can treat $9,000 as secured and reclassify the remaining $6,000 as unsecured. The secured portion is paid with interest at a court-approved rate; the unsecured portion may receive only a small percentage. This applies to car loans, furniture financing, and similar secured debts.¹

Vehicles carry a big exception. If you bought the car for personal use and the loan originated within 910 days (about two and a half years) before you filed, cramdown is off the table. The lender keeps its full claim as secured debt regardless of the car’s actual value.⁵ The 910-day rule only reaches purchase-money loans. Refinanced auto loans and title loans on a vehicle you already owned fall outside it.

The Anti-Modification Rule on Home Mortgages

A Chapter 13 plan cannot modify the rights of a creditor whose claim is secured only by your principal residence.¹ No reducing the balance, no lowering the rate, no stretching the term, even when the home is underwater. The phrase that matters is “secured only by.” If the mortgage covers additional property, or the lender holds a second lien that is entirely unsecured because the first mortgage exceeds the home’s value, different rules may apply and the anti-modification bar may not kick in.

Curing a Default on Long-Term Debt

The anti-modification rule does not leave homeowners without options. Section 1322(b)(5) lets you cure missed payments on any long-term debt whose final payment falls after the plan ends. This is the provision that saves homes from foreclosure.¹

The mechanics are simple. Say you’re $12,000 behind on your mortgage at filing. The plan spreads that $12,000 arrearage across its full term, three to five years, while you keep making the regular monthly mortgage payment on time outside the plan. Complete every plan payment and the arrearage is deemed cured. Your original loan terms stay intact.⁶

There is a hard deadline for using this power on your home. You can cure a default on your principal residence only as long as the property has not yet been sold at a foreclosure sale under state law.¹ Once the sale is complete, the right to cure is gone.

Protecting a Co-Signer

The plan can classify co-signed consumer debts separately and pay them ahead of other unsecured claims. The automatic stay in Chapter 13 already shields co-signers from collection during the case; classification lets you direct enough money to those debts that your co-signer isn’t left exposed after the plan ends.⁶ The plan can’t unfairly discriminate against other unsecured creditors when it does this, but courts recognize co-signer protection as a legitimate reason to classify separately.

Confirmation Standards the Plan Has to Meet

Proposing a plan is the easy part. Section 1325 imposes several tests that trip up filers.

Good Faith

The plan must be proposed in good faith. Courts look at the totality of the circumstances, including whether the filer is trying to abuse the process, conceal assets, or file mainly to delay one creditor.⁵ There is no bright-line formula, and a judge who reads the plan as manipulation rather than genuine reorganization can deny confirmation on that ground alone.

The Liquidation Test

Your unsecured creditors have to receive at least as much through the plan as they would have collected if your assets had been sold off in a Chapter 7 liquidation.⁵ Identify your nonexempt property, subtract hypothetical Chapter 7 administrative costs and any liens, and that figure is the floor for what unsecured creditors get under your plan. Substantial nonexempt assets push your plan payments up even if your income is modest.

Disposable Income

If the trustee or any unsecured creditor objects to confirmation, the court can’t approve the plan unless you commit all projected disposable income for the full length of the plan. Disposable income is current monthly income minus what you reasonably need for living expenses, ongoing domestic support obligations, and necessary business costs if you’re self-employed.⁵ Charitable contributions up to 15 percent of gross income are excluded from the calculation. Above-median filers feel this test hardest, because “reasonable” expenses are set by IRS-based standards rather than actual spending.

Feasibility

The court must find that you can actually make every payment the plan proposes.⁵ Judges scrutinize income stability, employment history, and whether the budget leaves enough for basic living expenses. A plan with no margin for surprise expenses often won’t clear this hurdle.

Costs Built Into Every Payment

Not all of your plan payment reaches creditors. The Chapter 13 standing trustee takes a percentage-based commission on every dollar you pay, and that commission can be as high as 10 percent.⁷ The exact percentage varies by district, and it comes off the top before creditors receive anything. Attorney fees are also typically paid through the plan and can run several thousand dollars depending on the district.

If You Can’t Complete the Plan

Falling behind doesn’t automatically end the case, but it starts a clock. The trustee or a creditor can move to dismiss the case or convert it to Chapter 7, and the court will pick whichever option best serves creditors.⁸ Missed plan payments are the most common trigger, but so are failure to maintain post-petition domestic support, material default on a plan term such as keeping the mortgage current, and failure to file required tax returns.

You always keep the right to voluntarily dismiss the case or convert it to Chapter 7, and any waiver of that right is unenforceable.⁸ Converting to Chapter 7 can make sense if the situation has deteriorated past recovery, though a Chapter 7 trustee may sell nonexempt assets you were protecting through Chapter 13.

When completion becomes impossible for reasons outside your control, a hardship discharge is a narrower alternative. It requires that the failure be due to circumstances you shouldn’t be held accountable for, that unsecured creditors have already received at least their Chapter 7 equivalent, and that plan modification isn’t workable.⁹ A hardship discharge covers fewer debts than the discharge you get for completing the plan.

1
Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
2
Office of the Law Revision Counsel. 11 USC 507 – Priorities
3
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
4
U.S. Department of Justice. Census Bureau Median Family Income By Family Size
5
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
6
United States Courts. Chapter 13 Bankruptcy Basics
7
Office of the Law Revision Counsel. 28 USC 586 – Duties; Supervision by Attorney General
8
Office of the Law Revision Counsel. 11 USC 1307 – Conversion or Dismissal
9
Office of the Law Revision Counsel. 11 USC 1328 – Discharge