Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time

By Cara O'Neill

Stop creditors and get more time to pay.

Filing for Chapter 13 bankruptcy stops creditors, lawsuits, wage garnishments, bank levies, and other collection actions immediately, giving you time to restructure your debts. Yes, you’ll pay into a three- or five-year repayment plan in Chapter 13. But your money will go toward the debts that matter most—like your mortgage, car loan, support obligations, and taxes. Remaining debts, such as credit card, medical, and utility bills, usually receive only a fraction of what you owe.

Also, Chapter 13 offers unique debt solutions not available in Chapter 7, sometimes making Chapter 13 the better choice even for those who qualify for Chapter 7. For instance, only in Chapter 13 can filers do the following:

• keep all property
• avoid foreclosure and vehicle repossession
• pay the fair market value for a car, and
• in some cases, eliminate a junior mortgage loan.

This plain-English Chapter 13 guide covers the Chapter 13 process from start to finish, explaining how to determine if you qualify for Chapter 13, what’s required to catch up on your mortgage and keep your home, and how to rebuild your credit after bankruptcy. You’ll also learn more about the following:

• how much you’ll pay in a repayment plan
• which debts get erased when the case ends, and
• how to find and hire the right lawyer

The revised edition explains where to find legal updates, bankruptcy forms, and state-specific information.

• Language: English
• Publisher: NOLO
• Release date: Jun 7, 2024
• ISBN: 9781413331790

Cara O'Neill

Cara O'Neill is a bankruptcy and litigation attorney in Northern California and a legal editor and writer with Nolo. Before joining Nolo, she practiced in the areas of criminal and civil litigation, and bankruptcy. She also served as an administrative law judge and taught law courses as an adjunct professor. She received her law degree from the University of the Pacific, McGeorge School, graduating Order of the Barristers—an honor society recognizing excellence in courtroom advocacy. Cara has edited, authored, and coauthored several Nolo books, including How to File for Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy, Everybody’s Guide to Small Claims Court, and Credit Repair.

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17th Edition

Chapter 13 Bankruptcy

Keep Your Property & Repay Debts Over Time

Attorney Cara O’Neill

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SEVENTEENTH EDITION

JUNE 2024

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Acknowledgments

This book wouldn’t be possible without the original author, Stephen R. Elias. Steve wrote many Nolo books, including The Foreclosure Survival Guide: Keep Your House or Walk Away With Money in Your Pocket and The New Bankruptcy: Will It Work for You? and was the coauthor of How to File for Chapter 7 Bankruptcy. Steve was a practicing attorney in California, New York, and Vermont before joining Nolo in 1980. Over his long career, he was featured in such major media as The New York Times, The Wall Street Journal, Newsweek, Good Morning America, 20/20, Money magazine, and more. He has been missed since his passing in 2011.

Thanks must also go to attorneys Kathleen Michon and Patricia Dzikowski, both of whom have had a hand in significantly shaping this book over the years.

About the Author

Cara O’Neill is an editor with Nolo and an attorney who has practiced law in California for more than 25 years. Before joining Nolo, she worked as a bankruptcy lawyer, served as an administrative law judge, litigated criminal and civil cases, and taught law courses as an adjunct professor. She earned her law degree in 1994 from the University of the Pacific, McGeorge School of Law, where she served as a law review editor and graduated as a member of the Order of the Barristers—an honor society recognizing excellence in courtroom advocacy. Cara authors and coauthors several Nolo books, including How to File for Chapter 7 Bankruptcy, The New Bankruptcy, Money Troubles, and Credit Repair.

Table of Contents

Part I: Is Chapter 13 Right for You?

1 How Chapter 13 Works

An Overview of Chapter 13 Bankruptcy

Debts Discharged in Chapter 13 Bankruptcy

Chapter 13 Bankruptcy and Foreclosure

Special Chapter 13 Features: Cramdowns and Lien Stripping

Is Chapter 13 Right for You?

Alternatives to Bankruptcy

2 The Automatic Stay

How the Automatic Stay Works

How Long the Stay Lasts

How the Stay Affects Common Collection Actions

How the Stay Affects Actions Against Codebtors

When the Stay Doesn’t Apply

Evictions

3 Are You Eligible to Use Chapter 13?

The Effect of a Previous Bankruptcy Discharge

Business Entities in Chapter 13

Chapter 13 Debt Limits

Providing Income Tax Returns

Child Support and Alimony Payment Requirements

Annual Income and Expense Reports

Drafting a Repayment Plan

Paying to Keep Nonexempt Property

You Must Take Two Educational Courses

4 Do You Have to Use Chapter 13?

What Is the Means Test?

The Means Test

Classifying Your Debts

Forced Conversion to Chapter 13

5 Can You Propose a Plan the Judge Will Approve?

Repayment Plan Calculations: An Overview

If Your Current Monthly Income Is Less Than Your State’s Median Income

If Your Current Monthly Income Is More Than Your State’s Median Income

Understanding Property Exemptions

6 Making the Decision

Part II: Filing for Chapter 13 Bankruptcy

7 Complete Your Bankruptcy Forms

Required Forms, Fees, and Where to File

For Married Filers

Voluntary Petition for Individuals Filing for Bankruptcy (Form 101)

Forms Relating to Eviction Judgments (Forms 101A and 101B)

Schedules (Forms 106A/B–J)

Summary of Your Assets and Liabilities and Certain Statistical Information (Form 106Sum)

Declaration About an Individual Debtor’s Schedules (Form 106Dec)

YourStatement of Financial Affairs for Individuals Filing for Bankruptcy (Form 107)

YourStatement About Your Social Security Numbers (Form 121)

Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period and Chapter 13Calculation of Your Disposable Income (Forms 122C-1 and 122C-2)

Disclosure of Compensation of Attorney for Debtor (Form 2030)

Mailing Matrix

Income Deduction Order

8 The Chapter 13 Plan

National Chapter 13Plan (Form 113)

Chapter 13 Plan Requirements

Repayment of Unsecured Debts: Allowed Claims

Drafting Your Plan

Sample Plan

9 Filing the Bankruptcy Case

Other Documents You’ll File

Paying the Filing Fee

Electronic Filing

Emergency Filing

After You File

10 Handling Routine Matters After You File

The Automatic Stay

Dealing With the Trustee

Make Your First Payment

If You Operate a Business

The Meeting of Creditors

Changing Your Plan Before the Confirmation Hearing

The Confirmation Hearing

Changing Your Plan After a Failed Confirmation Hearing

Amending Your Bankruptcy Forms

Filing a Change of Address

Filing Tax Returns

Redacting Sensitive Information

Filing Annual Income and Expense Statements

Personal Financial Management Counseling

Chapter 13 Debtor’s Certifications Regarding Domestic Support Obligations and Section 522(q)(Form 2830)

Part III: Making Your Plan Work

11 Common Legal Issues

Filing Motions

Dealing With Creditors’ Motions

If an Unsecured Creditor Objects to Your Plan

Handling Creditor Claims

Asking the Court to Eliminate Liens

12 Carrying Out Your Plan

Your Income Increases

Selling Property

Modifying Your Plan When Problems Come Up

Attempts to Revoke Your Confirmation

When You Complete Your Plan

13 If You Can’t Complete Your Plan

Dismiss Your Case

Convert Your Case to Chapter 7 Bankruptcy

Seek a Hardship Discharge

14 Life After Bankruptcy

Rebuilding Your Credit

Attempts to Collect Discharged Debts

Postbankruptcy Discrimination

Attempts to Revoke Your Discharge

Part IV: Help Beyond the Book

15 Hiring and Working With a Lawyer

What Does Legal Representation Mean?

How to Find a Bankruptcy Lawyer

What to Look for in a Lawyer

Paying Your Lawyer

Working With Your Lawyer

16 Legal Research

Where to Find Bankruptcy Law

Bankruptcy Background Materials: Overviews, Encyclopedias, and Treatises

Finding Federal Bankruptcy Statutes

Finding the Federal Rules of Bankruptcy Procedure (FRBP)

Finding Local Court Rules

Finding Federal Court Bankruptcy Cases

State Statutes

State Court Cases

Other Helpful Resources

Glossary

Appendix

How to Use the Downloadable Forms on the Nolo Website

List of Forms Available on the Nolo Website

Index

PART

I

Is Chapter 13 Right for You?

CHAPTER

1

How Chapter 13 Works

An Overview of Chapter 13 Bankruptcy

Do You Need a Lawyer?

Filing Your Papers

Costs

The Repayment Plan

The Automatic Stay

The Meeting of Creditors

Plan Objections

The Confirmation Hearing

Possible Additional Court Appearances

Making Your Payments Under the Plan

If Something Goes Wrong

Personal Financial Management Counseling

After You Complete Your Plan

Debts Discharged in Chapter 13 Bankruptcy

Debts You Can Discharge

Debts You Can’t Discharge

Debts You Can’t Discharge If the Creditor Successfully Objects

Chapter 13 Bankruptcy and Foreclosure

When the Automatic Stay Can Stop Foreclosure

Catching Up on Mortgage Arrears Through Your Chapter 13 Plan

Deficiency Balances Are Discharged in Bankruptcy

Special Chapter 13 Features: Cramdowns and Lien Stripping

Cramdowns: Reducing Secured Loans to the Value of the Collateral

Lien Stripping: Getting Rid of Second Mortgages and Other Liens on Real Estate

Is Chapter 13 Right for You?

Upper-Income Filers Must Use Chapter 13

Reasons to Choose Chapter 7

Reasons to Choose Chapter 13

Alternatives to Bankruptcy

Do Nothing

Negotiate With Your Creditors

Chances are good that you’ve picked up this book because your debts have become overwhelming. Maybe you’re facing foreclosure on your home or repossession of your car. Or perhaps you’re a high-income earner whose debts have grown beyond your ability to repay them. If so, Chapter 13 can help.

If you’re like many, you might prefer to file for Chapter 7 bankruptcy—the chapter individuals file most frequently. Not only is Chapter 7 over in a matter of months, but filers don’t repay creditors in a repayment plan.

But not everyone qualifies for Chapter 7, and Chapter 13 offers benefits that Chapter 7 doesn’t—some of which are so helpful that people who can use Chapter 7 sometimes choose Chapter 13 instead.

For instance, the Chapter 13 repayment plan allows a debtor to repay obligations over time, often at a discount. Also, the ability to catch up on back payments lets filers keep a house, car, or other property they’d otherwise lose. Others use the three- to five-year plan to pay off debts they can’t eliminate in bankruptcy, such as back taxes or child support arrearages. These problems can’t be solved using Chapter 7.

If you think Chapter 13 might help you and want to know more about how it works, this is the book. You should find answers to all your questions.

However, it’s not a DIY book and stops short of giving you all the forms and instructions needed to prepare your own Chapter 13 bankruptcy. The reality is that very few people can complete a Chapter 13 case without attorney representation. (See "Do You Need a Lawyer?," below.)

That said, times are changing, and filing for bankruptcy is getting easier—primarily because the forms are now simpler to use. Even so, the forms don’t explain bankruptcy law or procedure. If you file on your own, you’re responsible for learning the process and understanding how a filing would affect your income and assets, which can be a daunting task.

But we’re jumping ahead. You must first decide whether Chapter 13 is right for you, and there’s a lot to know.

This chapter gets you started by providing an overview of all aspects of Chapter 13 bankruptcy, as well as options for dealing with your debts outside of bankruptcy. It’s intended to give you a taste of what filing Chapter 13 involves and its benefits.

As you go through it, don’t expect to grasp everything right away—it’s a complicated area of law, so naturally, getting the hang of it involves a learning curve.

Plus, help is always at your fingertips. Each topic discussed in the first chapter is covered in more detail in the following chapters (we tell you where). Feel free to skip ahead if you’re having difficulty grasping a concept but want to learn more.

An Overview of Chapter 13 Bankruptcy

Typically, a Chapter 13 filer has a good income and can afford to repay some amount to creditors, but perhaps not the entire balance owed. Other debtors need time to catch up on bills they can’t erase in bankruptcy without the looming threat of a collection lawsuit or wage garnishment.

The primary difference between Chapters 7 and 13 is the time required to complete the chapter. The lengthy Chapter 13 plan gives debtors the ability to force creditors into a Chapter 13 payment plan, which is quite powerful. Unlike a quick Chapter 7 case, a Chapter 13 filer can restructure bills over three to five years and sometimes even pay less than what’s owed.

Also, Chapter 13 filers keep all property regardless of its value (although this comes at a price—more about this later). In Chapter 7, filers can keep only the things necessary to work and live, such as a modest car, some equity in a home, household furnishings, and a retirement account. All other property gets sold for the benefit of creditors.

Chapter 13 has other valuable benefits, too, discussed below in Reasons to Choose Chapter 13. However, as mentioned above, most people would agree that the most powerful is that it can help you save your home.

Chapter 13 bankruptcy allows you to catch up on mortgage payments through your plan and avoid foreclosure. Sometimes, you can even eliminate junior mortgages and home equity loans. (See Ch. 8.)

Do You Need a Lawyer?

For the vast majority of Chapter 13 filers, the answer is yes. Even bankruptcy courts strongly suggest that filers retain counsel.

It’s not that people can’t understand how Chapter 13 bankruptcy generally works or fill out the petition and accompanying schedules and forms. The problem is that Chapter 13 law can be tricky. The difficulty is understanding what will happen to assets, how much to repay creditors, and other complicated Chapter 13 repayment plan requirements.

Calculating plan payments is complicated without the assistance of computer software, which is expensive and generally requires bankruptcy knowledge to complete correctly. It is also not uncommon for the trustee—the official responsible for overseeing your case—or creditors to challenge or object to various aspects of a filer’s proposed plan. You might have to argue against objections, negotiate with creditors, or modify your plan. Most Chapter 13 plans need at least one modification before receiving court approval, even when prepared by an attorney.

Even though we believe that most Chapter 13 filers benefit from legal representation, it’s still important to understand the Chapter 13 process, including options for dealing with debts and property, such as reducing loan amounts through lien stripping or a cramdown. You can also run some preliminary numbers to determine if Chapter 7 is an option for you and if you earn enough to fund a Chapter 13 plan. (Chs. 4 and 5 address Chapter 7 qualification and Chapter 13 income requirements. See Ch. 15 for more about working with a bankruptcy lawyer.)

Armed with the knowledge in this book, you’ll be better positioned to help your attorney represent you effectively.

Filing Your Papers

Be prepared to disclose all aspects of your financial situation on the bankruptcy forms provided by the bankruptcy court. You’ll list income, property, debt, and financial transaction information going back up to 10 years in some instances.

You’ll also complete two forms to determine how long your repayment plan must last. If your gross income exceeds the state median for your family size, your plan must last five years, with a few exceptions. You can propose a three-year plan if your income is less than the median.

Most forms are identical to those you’d file in Chapter 7. However, you’ll also prepare a Chapter 13 repayment plan for court approval. The plan shows how you propose to pay mandatory obligations in full, such as support and tax arrearages. You must also pay mortgage and car loan arrearages if you plan to keep the house or car (this applies to any debt secured by property).

But that’s not the extent of your plan responsibilities. Any income remaining after paying mandatory debts and deducting allowed monthly living expenses is considered disposable income. Your other debts, known as nonpriority unsecured debts, share your disposable income. At the end of your three- or five-year plan, any remaining nonpriority unsecured debt balance gets eliminated or discharged, with some exceptions, student loans being the most notable—you’ll remain responsible for those without taking additional steps. (See Ch. 8.)

TIP

This overview purposely omits information, and more plan requirements exist. However, this is how a plan works at its core. We’re introducing only the basics to prevent confusing you with too much information early on. As you’ll learn later, you might pay more, or possibly less, because of other plan requirements, which we explain in more detail below in The Repayment Plan section. Still, this chapter is an overview only. We address all topics thoroughly in the dedicated chapters.

You’ll also have to complete coursework and provide documentation verifying the figures included in your bankruptcy paperwork. For instance, you’ll need to do the following:

file a certificate showing you participated in a credit counseling program during the 180 days before filing

complete a debtor education course before making your final plan payment

submit pay stubs from the 60 days before you file

provide proof that you’ve filed your federal and state income tax returns for the previous four years, and

if you’re a business owner, profit and loss statements (business owners can file for Chapter 13, but not the business itself).

Depending on your local jurisdiction’s rules, you’ll either file the financial documents with the court or provide them to the trustee. (Chs. 7 through 9 discuss the bankruptcy forms, repayment plan, and filing process in detail.)

Costs

Everyone who files for Chapter 13 must pay the filing fee of $313. You’ll also pay about $60 to a credit counseling agency for your prefiling credit counseling and postfiling debt management counseling.

If you decide to hire a lawyer to help you with your case, you can expect to pay an additional $3,500 or more in legal fees, depending on the prevailing rate in your area.

You likely won’t pay the entire legal fee before your lawyer files your case. Many attorneys will ask you to make an initial payment, which could be as low as $100 but likely more. In Chapter 13, you can pay the remaining legal fees in installments through your plan.

If you’re wondering how your lawyer decides your initial deposit amount, the answer might surprise you, although you’ll recognize its practicality. Your lawyer will consider the likelihood of you completing your plan. If your case gets dismissed early, the lawyer might not receive all the installments, leaving the lawyer partially unpaid.

The Repayment Plan

As discussed briefly above, you’ll submit the repayment plan with your other bankruptcy papers or shortly after your initial filing. The plan shows your creditors, the trustee, and the judge that you have enough income to pay mandatory amounts and explains how much disposable income remains to pay nonpriority unsecured debts—typically, credit card balances, medical and utility bills, and personal loans.

Debts You Must Repay Fully

Chapter 13 requires you to pay certain high-priority debts in full through the plan. Domestic support arrearages and recently incurred income tax debt are the most common debts filers must pay fully. These amounts can be large, often contributing to hefty plan payments. To understand how much you’d pay, divide the balance owed by the number of plan months (36 or 60).

You’ll do the same calculation for mortgage and car loan arrearages, which you must pay to keep a car or home. Again, this amount can increase plan payments substantially, depending on how far behind you’ve fallen. But that’s not all. You must also be able to keep up with monthly living expenses, including mortgage and car payments.

What Is Disposable Income?

Any income remaining after paying required debts is disposable income. Your nonpriority unsecured creditors—or all creditors other than those referenced above—are entitled to your disposable income for the life of your plan.

Debts You Can Pay Partially

You don’t need enough disposable income to repay your remaining creditors fully. The trustee divides it between your nonpriority unsecured creditors on a pro rata or percentage basis. The creditors with the highest balances receive the most significant disposable income portion.

Also, the amount owed to this class of creditors doesn’t change how much you must pay. They share your disposable income. These are the creditors who often receive pennies on the dollar. Except for student loans, any balance left on these debts is erased or discharged at the end of the plan.

Typically, the debts falling into this class include credit card balances, medical bills, personal loans, utility debt, and other nonpriority unsecured obligations.

When You Must Pay to Keep Property

You must overcome another hurdle when determining how much you must pay nonpriority unsecured creditors. These creditors must receive at least as much as they would have if you’d filed for Chapter 7 instead. (See Ch. 3.)

Here’s a simple way to think of it: The amount you pay to all creditors other than secured creditors (don’t include payments to a mortgage or vehicle lender) must meet or exceed the value of the property you’d have given up in Chapter 7. This formula ensures that your creditors aren’t unfairly prejudiced by the rule that allows you to keep property in Chapter 13 that would be sold in Chapter 7.

This test is known as the best interest of creditors test. To determine the best interest amount, calculate the value of all property you can’t protect with a bankruptcy exemption. Then, subtract the costs, commissions, and fees necessary to sell the property, including the Chapter 7 trustee’s fee, which can be substantial. The final figure is the minimum amount you must pay unsecured creditors.

If you have enough disposable income to pay more, you’ll pay your disposable income up to 100% of your debt balance. You don’t have to pay more than you owe.

TIP

Why would someone pay 100% of what they owe in Chapter 13? It often happens when someone with a significant amount of disposable income uses Chapter 13 to pay off nondischargeable debts, like taxes or support obligations. If their disposable income covers 100% of their debts, they must fully repay every debt they owe if they want to use Chapter 13 to stop creditor collections during the repayment period. Even though the filer wouldn’t get a discount on the debt, there’s still a benefit to filing for Chapter 13. A filer can spread payments over five years, forcing a creditor to accept a five-year payment plan.

Repayment Period Length

You must propose a three- or five-year repayment plan depending on your income. A filer whose income is more than the median income in their state must propose a five-year repayment plan unless the plan pays 100% of the filer’s unsecured debt.

Filers whose income is less than the state median can choose between Chapters 7 and 13. If they use Chapter 13, these filers can propose a three-year repayment plan and use their actual expenses to calculate how much they’ll devote to the plan. Such filers sometimes opt to pay a smaller payment over five years to increase their chances of getting their plan approved by the court. (For more qualification and plan length information, see Chs. 4 and 5.)

Coming Up With a Plan the Judge Will Approve

You can’t proceed with a Chapter 13 bankruptcy unless a bankruptcy judge approves or confirms your plan. You’ll have to propose a plan that meets all requirements and prove you have enough income to fund it.

However, some judges will confirm a zero percent plan that doesn’t repay any portion of credit card balances or other non-priority unsecured debts. Filers use it if they don’t have any disposable income left after paying child support arrearages and other required obligations. It’s an excellent benefit if you have large nondischargeable debts because it offers the best of both Chapters 7 and 13. You can get a complete discharge of qualifying debt along with time to pay off a nondischargeable tax bill or domestic support obligation without worrying about a potential wage garnishment.

The Automatic Stay

When you file for Chapter 13 bankruptcy, the automatic stay immediately goes into effect. The stay prevents most creditors from taking action to collect a debt against you or your property. For instance, if you’re facing a home foreclosure or a vehicle repossession, the stay will stop the proceeding in its tracks. However, the automatic stay will be limited if the court recently dismissed a bankruptcy case and won’t apply if the court dismissed two recent bankruptcies. (You’ll find more automatic stay details in Ch. 2.)

The Meeting of Creditors

As soon as you file your bankruptcy papers, the court will send out a notice of a meeting of creditors or 341 hearing that will take place within 20 to 40 days after your filing date. If you and your spouse filed jointly, you’ll both attend. You’ll each need to bring two forms of identification—a picture ID and proof of your Social Security number.

The Chapter 13 bankruptcy trustee conducts the creditors’ meeting in a conference room, not a courtroom. No judge will be present, but filers must cooperate with the trustee.

A typical creditors’ meeting lasts less than 15 minutes. The trustee will ask any questions raised by the information entered in the forms. The trustee will be interested in the legality of your proposed repayment plan and your ability to make the payments.

The trustee will also require proof that you’ve filed your tax returns for the previous four years. Ultimately, you won’t be able to proceed unless your tax filings are current. (See Ch. 8 for more on Chapter 13 plans.)

RESOURCE

Help if you’re behind in tax payments. Many people who owe taxes benefit from professional help from a tax attorney, an enrolled agent (licensed by the IRS), or a tax preparer. For more information on getting current on taxes and professional help, read Stand Up to the IRS, by Frederick W. Daily and Stephen Fishman (Nolo).

When the trustee finishes asking questions, any creditors who’ve appeared will have a chance to question you. It’s unlikely that a creditor will show, but if one does, you’ll be required to answer questions related to your past and present financial circumstances.

Disgruntled creditors or those suspecting fraud might come to gather evidence to support their case, much like litigants do in a deposition. They’ll likely evaluate whether to proceed after the hearing. If they do, expect your answers to be used against you.

By contrast, filers often learn whether the trustee has an objection to the plan. You might be able to modify it to accommodate the trustee. If you can’t resolve the issue, the trustee or creditor will object in writing in a formal motion, and a bankruptcy judge will decide the matter at the plan confirmation hearing (more below).

Plan Objections

A creditor who has an objection to the proposed plan is unlikely to voice that objection at the creditors’ meeting. Instead, the creditor will file a motion with the court. The trustee will also file a motion if you can’t resolve a problem informally.

For instance, a trustee or creditor might claim your plan isn’t feasible if you don’t have enough income to make the required plan payment.

But that isn’t the only objection you might face. Creditors often claim they’re legally entitled to more money, or that you could pay more if you decreased overly luxurious living expenses.

The trustee will often weigh in on a creditor’s position, and, as a general rule, the judge will go along with the trustee unless your lawyer can point out an error.

The Confirmation Hearing

Chapter 13 bankruptcy requires at least one appearance by you or your attorney before a bankruptcy judge. At this confirmation hearing, usually held a few weeks after the creditors’ meeting, the judge either confirms your proposed plan or sends you back to the drawing board for various reasons—usually because your plan doesn’t meet Chapter 13 requirements. For example, a judge might reject your plan because you don’t have enough income to pay off your priority creditors, like recent taxes or support arrearages, while staying current on your secured debts, such as a car note or mortgage.

You can amend your proposed plan until you get it right or the judge decides it’s hopeless. During this time, though, you must make payments to the trustee under your proposed plan. Each amendment requires a new confirmation hearing and appropriate written notice to your creditors. Once your plan is confirmed, it will govern your payments for the three- to five-year repayment period. (For more on the confirmation hearing, see Ch. 10.)

Possible Additional Court Appearances

If your plan is prepared perfectly, your confirmation hearing could be the only time the bankruptcy judge deals with your case. However, additional court appearances by you or your attorney might be necessary to do the following:

confirm your repayment plan if you need to modify or change your plan

value an asset, if your plan proposes to pay less for a car or other property and the creditor objects to the valuation

respond to requests by a creditor or the trustee to dismiss your case or amend your plan

respond to a creditor who opposes your right to discharge a particular debt (perhaps claiming that you incurred the debt through fraud)

discharge a type of debt that can be discharged with court approval, such as a student loan, or

eliminate a lien on your property that would survive Chapter 13 unless the judge removed it. (See Ch. 11.)

Making Your Payments Under the Plan

You’re required to make your first proposed plan payment within 30 days after filing for bankruptcy. If the bankruptcy court confirms your plan, the trustee will continue distributing your payment according to the plan terms. If your Chapter 13 case never gets off the ground, the trustee will return the money to you, less administrative expenses and any car loan