Chapter 13 payments are the monthly amounts you send to a court-appointed trustee, who distributes the money to your creditors under a court-approved plan. The payment is set at the higher of two figures: your monthly disposable income, or the amount needed to give unsecured creditors at least what they would have received if you had filed Chapter 7 instead. You pay for three or five years depending on how your household income compares to your state’s median, and missing payments is the fastest way to lose the case.
How the Monthly Amount Is Set
There isn’t one formula. Two tests both have to be satisfied before a judge will confirm your plan, and whichever produces the larger payment is the one you owe.
Disposable Income
The first test looks at what you can afford. Start with your average monthly income over the six months before filing, then subtract reasonably necessary living expenses. Whatever’s left is your disposable income, and the court expects it to fund the plan.1Office of the Law Revision Counsel. 11 US Code 1325 – Confirmation of Plan
The math runs through Official Forms 122C-1 and 122C-2, which apply IRS expense standards for housing, transportation, and food based on your county and household size. You can claim actual expenses above those standards, but you’ll need documentation for anything over the allowance.
The income side sweeps in almost everything: wages, self-employment income, rental income, pensions, unemployment, even regular contributions from family. Child support you receive for a dependent child is excluded. Most other recurring money counts.
Best Interest of Creditors
The second test sets a floor. Unsecured creditors must receive at least as much through your plan as they would have gotten in a Chapter 7 liquidation of your non-exempt property.1Office of the Law Revision Counsel. 11 US Code 1325 – Confirmation of Plan If you own a home with equity above the state homestead exemption, or you have other valuable non-exempt property, this test can push your payment higher than disposable income alone would. People with substantial assets and modest income sometimes discover Chapter 13 is more expensive than they expected for this reason.
What the Payment Has to Cover
The payment isn’t a lump you toss at “the debts.” The plan pays creditors in a rigid order, and the size of the obligations at the top of the stack drives what your monthly figure has to be.
Priority Debts Paid in Full
Certain debts must be paid in full through the plan. Domestic support obligations sit at the top: child support and alimony come before anything else.2Office of the Law Revision Counsel. 11 USC 507 – Priorities Recent income taxes, generally those from the three years before filing, are also priority claims. The plan must allocate enough to cover every dollar of these, or the court won’t confirm it.3Office of the Law Revision Counsel. 11 US Code 1322 – Contents of Plan
Secured Debts and Cramdown
Debts backed by collateral get their own treatment. If you’re behind on your mortgage, the plan has to include enough to cure those missed payments over its life while you keep making the regular mortgage payment to the lender. Car loans work the same way, with one wrinkle: if the vehicle was purchased more than 910 days (roughly two and a half years) before filing, you can cram the loan down to the car’s current market value instead of paying the full balance.4Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan Newer purchases don’t qualify, and cramdown never applies to a primary mortgage.
Unsecured Debts Get What’s Left
Credit cards, medical bills, and personal loans sit at the bottom. These creditors split whatever remains after priority and secured claims are funded, in proportion to the size of their claims. It’s common for unsecured creditors to get pennies on the dollar, with the unpaid remainder discharged when the plan ends.
How Long You Pay
Plan length depends on income. If your household income is below your state’s median for a household your size, you can propose a plan as short as three years.1Office of the Law Revision Counsel. 11 US Code 1325 – Confirmation of Plan You can go longer, up to five, if you need the extra time to pay priority or secured debts, but you aren’t forced to.
If your income meets or exceeds the median, the commitment period is five years. The longer runway pushes more total dollars to unsecured creditors, on the theory that higher earners have more repayment capacity. No plan can run past five years for any reason.1Office of the Law Revision Counsel. 11 US Code 1325 – Confirmation of Plan If your priority and secured debts are too large to be paid inside sixty months, the plan is infeasible and won’t be confirmed.
When and How You Pay
Your First Payment Is Due Fast
The first payment is due within 30 days of filing the plan or the date of your order for relief, whichever comes first. Not 30 days after confirmation.5Office of the Law Revision Counsel. 11 US Code 1326 – Payments Confirmation hearings often don’t happen for weeks or months, so you’ll be paying before the plan is officially approved. The trustee holds those pre-confirmation payments until the plan clears.
In the same pre-confirmation window, you may owe adequate protection payments directly to some secured creditors, particularly car lenders, to compensate them for depreciation while the case sits pending.6Office of the Law Revision Counsel. 11 USC 1326 – Payments These reduce what you owe the trustee dollar for dollar, but they’re a separate obligation to track.
Wage Order or Direct Pay
Most filers use a wage order. The court directs your employer to withhold the plan payment from your paycheck and send it straight to the trustee.7Office of the Law Revision Counsel. 11 US Code 1325 – Confirmation of Plan – Section: c It’s the safest method because the money never touches your account. Self-employed filers and those without a traditional employer usually pay the trustee directly through an electronic portal. Consistency matters far more than method.
The Trustee’s Cut
The trustee’s office is paid out of your payments. Federal law caps the fee at 10 percent of what flows through the plan.8Office of the Law Revision Counsel. 28 USC 586 – Duties and Standing Trustees Actual rates vary by district, with some as low as 6 percent. The fee is built into the payment, not added on top, but for every $1,000 you send, as much as $100 goes to the trustee rather than your creditors.
Tax Refunds
Many trustees treat annual tax refunds as disposable income that belongs to creditors. Whether you have to turn yours over depends on your plan terms, local rules, and district standing orders. If your plan already pays unsecured creditors in full, you’re more likely to keep the refund. Otherwise, expect to hand it over unless you file a modification each year showing a genuine need, documented with specifics like unexpected medical bills or essential car repairs. Keep the receipts if the court lets you use the money.
Changing the Payment When Life Changes
Three to five years is a long time to hold income steady. Job losses, illnesses, divorces, and raises all happen mid-case, and the code accounts for that. You, the trustee, or any unsecured creditor can move to modify a confirmed plan.9Office of the Law Revision Counsel. 11 USC 1329 – Modification of Plan After Confirmation
Modifications can raise or lower the monthly amount, stretch or shorten the timeline, or change what a specific creditor gets. To get a reduction approved, you file a motion explaining what changed and attach proof: recent pay stubs showing lower earnings, medical bills from an unexpected illness, whatever documents the hardship. The modified plan still has to satisfy every original requirement, including full payment of priority debts, cure of secured arrears, and at least Chapter 7 value for unsecured creditors.
One hard limit: the revised plan cannot push payments beyond five years from the date your first payment was originally due.9Office of the Law Revision Counsel. 11 USC 1329 – Modification of Plan After Confirmation If you’re already in year four and need to lower the payment, there isn’t much room left to spread it out.
What Happens If You Fall Behind
Missed payments are the fastest way to lose bankruptcy protection. Federal law lists failure to make timely payments and material default on the plan’s terms as grounds for dismissal or conversion to Chapter 7.10Office of the Law Revision Counsel. 11 USC 1307 – Conversion or Dismissal Failing to keep up with post-filing domestic support is a separate, independent ground.
When you fall behind, the trustee files a motion to dismiss or convert. If the case is dismissed, the automatic stay lifts and every listed creditor can resume collection immediately: lawsuits, garnishments, foreclosure. Payments the plan already made stick, but the remaining balances are fully enforceable again. Most dismissals are without prejudice, so you can refile, though courts sometimes bar refiling for six to twelve months where they find bad faith.
Options Before Dismissal
If the shortfall has a legitimate cause, you have options before the case ends. The most common is a modification to lower payments temporarily or permanently. Converting to Chapter 7 is another route, but only if you’d actually qualify; a court won’t allow conversion for someone with enough income to keep paying.
In extreme cases, you can ask for a hardship discharge without finishing the payments. The bar is high. You must show the failure is due to circumstances genuinely beyond your control, that modification isn’t workable, and that unsecured creditors have already received at least what they’d get in a Chapter 7 liquidation.11Office of the Law Revision Counsel. 11 USC 1328 – Discharge A permanent disability or catastrophic illness might clear that bar; taking a lower-paying job generally won’t. A hardship discharge also covers fewer debts than a standard Chapter 13 discharge, so debts that would survive Chapter 7, like certain taxes and student loans, remain yours.