How Are Chapter 13 Payments Calculated?

Chapter 13 payments are calculated by adding four things together: the disposable income you must commit to unsecured creditors, the ongoing payments and past-due catch-up amounts on any secured debts you want to keep, priority debts that must be paid in full, and the standing trustee’s percentage fee on top. That total is then divided across the 36 or 60 months of your plan. A second rule sets a floor: unsecured creditors have to receive at least as much through your plan as they would have in a Chapter 7 liquidation, so if your non-exempt property is worth more than your disposable income alone would pay them, the payment goes up to meet that number.

Start With Your Current Monthly Income

Everything begins with what bankruptcy law calls your “current monthly income,” and that phrase is misleading. It isn’t last month’s paycheck. It’s the average of every dollar you received from every source during the six full calendar months before you filed. Wages, self-employment revenue, Social Security, pensions, rental income, and regular contributions from a spouse or household member all go into the average. A one-time bonus or windfall in that window gets averaged in too, which can push your figure higher than your normal earnings.

Multiply that six-month average by 12 and compare it to the median household income for your state and household size. That comparison is the hinge for two big decisions. It determines whether your plan runs three years or five, and it determines which method you use to calculate your expenses.¹ Below the median, you’re a below-median debtor. Above it, you’re above-median. The label matters more than most people expect.

Figure Out Your Disposable Income

Disposable income is what’s left of your monthly income after allowable expenses, and it sets the minimum you must pay unsecured creditors each month. How you calculate it depends on which side of the median line you land on.

If You’re Above the Median

Above-median debtors fill out Official Form 122C-2 and use IRS expense standards rather than actual spending. The IRS publishes National Standards for food, housekeeping supplies, clothing, personal care, and a miscellaneous allowance, and Local Standards for housing, utilities, and transportation that vary by county because costs in rural Kansas don’t look like costs in San Francisco.²³ You deduct the standardized amounts whether or not that’s what you actually spend. Certain categories, including health insurance premiums, childcare, and involuntary payroll deductions, come off at your actual cost. What’s left is your projected monthly disposable income, and it’s the floor for what unsecured creditors must receive each month.⁴

The IRS standards are refreshed periodically. For cases filed between November 2025 and March 2026, the U.S. Trustee Program lists the applicable figures by household size and geographic area.⁵

If You’re Below the Median

Below-median debtors skip the IRS tables. You subtract your actual reasonable and necessary living expenses from your current monthly income, and the remainder is your disposable income.¹ “Reasonable and necessary” is doing the work in that sentence. Mortgage, groceries, utilities, transportation, medical costs, insurance premiums, yes. Boat payments and premium cable, no. The trustee will push back on padded expenses, and inflated numbers are one of the quickest ways to see a plan rejected.

Check the Best Interest of Creditors Floor

Disposable income gives you one minimum. There’s a second one running in parallel, and your payment has to satisfy whichever is higher. The best interest of creditors test says unsecured creditors must receive at least as much through your Chapter 13 plan as they would have received if your assets had been liquidated in Chapter 7.⁴

That means totaling up the value of your non-exempt property. State exemptions protect certain assets; anything beyond the exemptions has a theoretical liquidation value. If you’re holding $15,000 in non-exempt equity, unsecured creditors need to receive at least $15,000 across your plan, even if disposable income alone would produce a smaller total.¹ Debtors with significant home equity, a paid-off vehicle, or investment accounts often find their required payment driven up by this test.

Add Ongoing and Past-Due Secured Debt Payments

If you want to keep a house, a car, or anything else pledged as collateral, your plan has to carry those payments. That means the regular monthly payment going forward, plus any past-due arrears spread across the plan.

Curing Arrears

One of Chapter 13’s core benefits is the ability to cure missed mortgage or car payments over three to five years while you keep making the regular monthly payment.¹ A mortgage secured only by your primary residence has a limit though: you can catch up the arrears, but you cannot reduce the principal balance or change the interest rate.⁶

Cramdowns on Other Secured Debts

For secured debts that aren’t a primary-residence mortgage, a “cramdown” can lower what you pay. If you owe more on a car loan than the car is worth, the plan can reduce the secured portion to the vehicle’s current fair market value and reclassify the rest as unsecured, where it usually receives only pennies on the dollar. There’s a timing rule: you must have bought the car more than 910 days (roughly two and a half years) before filing. Inside that window, the full loan balance stays secured.⁴

When a cramdown applies, the court sets the interest rate on the reduced balance using the formula from Till v. SCS Credit Corp.: start with the national prime rate and add a risk adjustment.⁷ The adjustment is typically one to three percentage points, though courts vary.

Add Priority Debts Paid in Full

Some debts get special status and have to be paid in full through the plan, no reductions. Child support and alimony, most income taxes from the last three years, and criminal fines or restitution all fall into this bucket.⁶ They also get paid before any money reaches general unsecured creditors. A big priority balance is one of the most common reasons a payment lands higher than a debtor’s initial estimate. You cannot negotiate around the full-payment rule.

For domestic support obligations, staying current on payments that come due after filing is also a condition of finishing the plan. Falling behind on post-filing support can block your discharge even if every other plan payment is made.

Add the Trustee’s Fee

Every dollar you pay flows through the standing trustee, who takes a percentage before distributing money to creditors. Federal law caps the fee at 10 percent.⁸ The actual number varies by district, set by the U.S. Trustee Program based on the trustee’s costs. Some districts sit around 3 to 5 percent; others run closer to the 10 percent ceiling.

The fee raises what you actually pay. If creditors need to receive $400 a month under your plan and the trustee takes 7 percent, you pay roughly $430 so that $400 gets through. Back-of-the-envelope estimates that leave this out come in low.

Divide by the Plan Length

Once the pieces are totaled, the length of the plan sets the monthly number. Below-median debtors commit to three years unless the court approves a longer period for cause. Above-median debtors generally commit to five. No plan can exceed five years.¹ The same total spread over 60 months produces a smaller monthly payment than 36 months, though it also means a longer commitment and more trustee fees along the way.

Each month the trustee applies your payment in a set order: administrative costs (including the trustee’s fee and any attorney fees paid through the plan) first, priority debts next, secured arrears after that, and general unsecured creditors last.⁶ Unsecured creditors often receive only a fraction of what they’re owed, which is permitted as long as the plan clears both the disposable income test and the best interest of creditors test.

Tax Refunds Can Raise What You Effectively Pay

Refunds you receive during the plan may not be yours to keep. Under Section 1306, property of the Chapter 13 estate includes what you acquire after filing until the case closes.⁹ Many trustees treat a refund as additional disposable income and require turnover. The reasoning is simple: withholding that consistently exceeds your actual tax liability is money that could have gone to creditors.

How much you have to hand over depends on the district and the individual trustee. Some require turnover above a small threshold; others carve out refunds tied to credits like the Earned Income Tax Credit. Adjusting withholding before or shortly after filing keeps less money exposed to this process.

Changing the Payment After Confirmation

The calculation isn’t locked in for five years. If your finances shift after confirmation, you, the trustee, or an unsecured creditor can move to modify the plan. Modifications can raise or lower monthly payments, extend or shorten the payment period within the five-year cap, or change what a class of creditors receives. Job loss, a pay cut, unexpected medical bills, and a new health insurance obligation are common triggers, and the statute specifically allows the plan to be modified to account for reasonable, documented health insurance costs the debtor did not previously have.¹⁰ The bankruptcy judge has to approve the new terms, and the trustee and creditors can object.

One eligibility boundary to note before running these numbers: Chapter 13 is limited to individuals with regular income whose unsecured debts are less than $526,700 and whose secured debts are less than $1,580,125, adjusted periodically for inflation with the current figures effective April 1, 2025.¹¹ Exceeding either cap ends the analysis; the payment calculation described here doesn’t apply.

1
United States Courts. Chapter 13 Bankruptcy Basics
2
United States Courts. Official Form 122C-2 – Chapter 13 Calculation of Your Disposable Income
3
U.S. Department of Justice. U.S. Trustee Program – Means Testing
4
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
5
U.S. Department of Justice. IRS National Standards for Allowable Living Expenses
6
Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
7
Cornell Law School. Till v SCS Credit Corp
8
Office of the Law Revision Counsel. 28 USC 586 – Duties; Supervision by Attorney General
9
Office of the Law Revision Counsel. 11 USC 1306 – Property of the Estate
10
Office of the Law Revision Counsel. 11 USC 1329 – Modification of Plan After Confirmation
11
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor