Summary. A Chapter 13 plan is a payment proposal that becomes a binding court order, and drafting one badly produces a case that fails eighteen months later with nothing accomplished. The plan must be filed with or shortly after the petition, payments must begin within thirty days whether or not the plan is confirmed, and the numbers must satisfy three separate tests — disposable income, best interests, and feasibility — that constrain each other. Most of the real work happens before filing: gathering the income history that fixes the commitment period, valuing the collateral that determines what secured creditors receive, and testing whether the household can actually sustain the payment for the full term. This guide walks the preparation, the plan's provisions section by section, the confirmation process and the objections to expect, and the post-confirmation management that keeps a case alive.

The plan is the case. Everything else — the petition, the schedules, the meeting of creditors — is machinery around a document that proposes what the debtor will pay, for how long, and to whom.

It is also a document that becomes a court order binding every creditor whether or not they read it, under 11 U.S.C. § 1327(a). United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010), held a confirmed plan binding even where a provision was legally erroneous, absent a timely objection or appeal. That cuts both ways: it is the source of the plan's power and the reason trustees and creditors scrutinize the language.

This guide is about drafting one that gets confirmed and that the debtor can actually complete.

Before drafting: the intake

Confirm eligibility

  • An individual with regular income, § 109(e) and § 101(30). Not a corporation or LLC. A sole proprietor qualifies and brings the business in with them.
  • Debt limits. Noncontingent, liquidated secured and unsecured debts must fall below the ceilings in § 109(e), which adjust every three years under § 104. Look up the current figures; do not rely on memory, and note that the temporary consolidated limit expired in 2024.
  • Credit counseling within 180 days before filing, § 109(h). The certificate must be filed.
  • Prior discharges. Section 1328(f) bars a discharge where the debtor received a Chapter 7, 11, or 12 discharge in a case filed within four years, or a Chapter 13 discharge within two years. A debtor in that position may still file — a "Chapter 20" — to cure arrears or strip a lien, but will not receive a discharge, and the plan must be drafted accordingly.

Gather the documents

  • Six months of pay stubs for every income source. This fixes current monthly income under § 101(10A) and therefore the commitment period.
  • Two years of tax returns.
  • Bank statements.
  • Mortgage statements with an itemized arrearage figure, and the escrow analysis.
  • Vehicle loan statements with the payoff, the contract date, and the original purchase date.
  • A property appraisal or a defensible valuation for real estate; NADA or Kelley Blue Book for vehicles.
  • Domestic support obligation orders and a current payment status.
  • The credit report, and a title search where lien priority matters.

Run the timing analysis

Current monthly income is the average of the six full months before filing. That is a mechanical figure, and it is frequently manipulable in the client's favor by waiting — or by not waiting.

A debtor who received a bonus four months ago is carrying it in the average for two more months. A debtor whose income dropped three months ago is showing income they no longer have. Choosing the filing month is often the single most valuable thing counsel does, and it takes ten minutes with a calculator.

The other timing questions: the 910-day window for vehicle cramdown, the one-year window for other purchase-money collateral, whether a foreclosure sale is scheduled, whether a tax year is about to close, and whether a preference exposure runs.

Test feasibility honestly, before filing

Build the household budget. Subtract the plan payment plus the ongoing mortgage. Ask whether the remainder supports the family for five years with no slack for a transmission, a medical event, or a lost shift.

A substantial share of Chapter 13 cases fail. The most common cause is a plan payment set at the edge of what the budget supports, confirmed, and then defeated by an ordinary expense. Counsel who says plainly that the numbers do not work — and recommends Chapter 7 and a surrender — serves the client better than counsel who confirms a plan that collapses in month nineteen.

The three tests

The plan must satisfy all three, and they constrain each other.

Disposable income — § 1325(b)

If the trustee or an unsecured creditor objects, the plan must pay unsecured claims in full or commit all projected disposable income for the applicable commitment period.

The commitment period under § 1325(b)(4): three years if current monthly income annualized is below the state median for the household size; five years if at or above it. Five years is the maximum under § 1322(d).

The calculation for above-median debtors uses the means test deductions of § 707(b)(2) on Form 122C-2 — IRS National and Local Standards rather than actual expenses for several categories. For below-median debtors it uses amounts reasonably necessary for maintenance and support, which gives the court discretion and makes Schedules I and J the operative documents.

"Projected" does real work. Hamilton v. Lanning, 560 U.S. 505 (2010), permits accounting for known or virtually certain changes rather than mechanically extrapolating history. Ransom v. FIA Card Services, N.A., 562 U.S. 61 (2011), disallows the vehicle ownership deduction where the debtor owns the car free and clear.

Best interests — § 1325(a)(4)

Each unsecured creditor must receive at least what it would receive in a Chapter 7 liquidation, in present value terms.

Compute a hypothetical Chapter 7: value each asset, subtract liens, subtract exemptions, subtract hypothetical trustee compensation under § 326 and administrative expenses, and distribute by priority. The remainder to general unsecured creditors is the floor.

Attach the liquidation analysis to the plan or to the confirmation memorandum. Trustees ask for it, and producing it unprompted moves confirmation along.

Feasibility — § 1325(a)(6)

The debtor must be able to make all payments and comply with the plan. This is where the budget meets the plan, and where an overreaching plan is denied confirmation.

Drafting the plan

Most districts now use Official Form 113, the national Chapter 13 plan form, or a local form adopted under Fed. R. Bankr. P. 3015.1. Use the district's form. Non-conforming plans are rejected.

Section 1: notices

The form requires checkboxes flagging nonstandard provisions, limitation of a secured claim based on collateral value, and avoidance of a security interest or lien. Failing to check a box that applies is a substantive defect — the provision is not effective, and Espinosa protection does not extend to it.

Section 2: plan payments and length

  • The amount and frequency, and the term in months.
  • Payments begin within thirty days of filing under § 1326(a)(1), whether or not the plan is confirmed. Debtors who wait for confirmation create an immediate default.
  • Income deduction order. Section 1325(c) permits an order directing the employer to remit. Most trustees require it, and it materially improves completion rates.
  • Additional payments — tax refunds, bonuses, proceeds of a lawsuit — where the plan commits them.

Section 3: secured claims

The mortgage on the principal residence. Section 1322(b)(2) prohibits modification of a claim secured only by the debtor's principal residence — Nobelman v. American Savings Bank, 508 U.S. 324 (1993). What the plan can do under § 1322(b)(5) is cure the arrears over the plan term while maintaining the ongoing payments.

Specify: the arrearage amount, the cure period, and whether ongoing payments are made through the trustee (conduit) or directly by the debtor. Conduit payments cost a trustee percentage but create a record and prevent the silent post-petition default that ends many cases. Many districts require conduit.

Wholly unsecured junior liens. Where a second mortgage is entirely underwater, most circuits permit strip-off: the claim is treated as unsecured and the lien voided on completion of the plan. This is the most valuable tool in the chapter, and Bank of America, N.A. v. Caulkett, 575 U.S. 790 (2015), makes it unavailable in Chapter 7 — a reason to file 13. It requires a motion to value under Fed. R. Bankr. P. 3012, or the plan's valuation provision where the local form permits it, with proper service under Rule 7004 on the lienholder.

Vehicles and other collateral. Under § 1325(a)(5) the plan may pay the value of the collateral with the deficiency unsecured, unless the hanging paragraph applies — a purchase-money interest in a motor vehicle acquired for personal use within 910 days of filing, or in any other thing of value acquired within one year. For those, the full claim is paid as secured.

Valuation is replacement value under § 506(a)(2) and Associates Commercial Corp. v. Rash, 520 U.S. 953 (1997). The interest rate is the prime-plus formula of Till v. SCS Credit Corp., 541 U.S. 465 (2004); learn the district's customary rate.

Adequate protection payments under § 1326(a)(1)(C) begin within thirty days for purchase-money personal property.

Surrender. Specify the collateral surrendered and that the stay is terminated as to it.

Section 4: lien avoidance

Section 522(f) permits avoidance of a judicial lien impairing an exemption, and of a nonpossessory, nonpurchase-money security interest in household goods, tools of the trade, and health aids.

The impairment formula in § 522(f)(2) is arithmetic: add the lien, all other liens, and the exemption; subtract the property's value; the excess is avoided.

In most districts this requires a motion, not merely a plan provision, though several local forms permit it in the plan with the notice checkbox. Check the local rule, and serve properly.

Section 5: priority claims

Section 1322(a)(2) requires payment in full of § 507 priority claims unless the holder agrees otherwise:

  • Domestic support obligations, § 507(a)(1). Paid in full, and § 1325(a)(8) additionally requires the debtor to be current on post-petition support at confirmation. Get the certification.
  • Administrative expenses, § 507(a)(2), including the trustee's percentage fee and debtor's counsel fees where paid through the plan.
  • Priority taxes, § 507(a)(8) — recent income taxes and trust fund taxes — paid in full without post-petition interest.

Section 6: unsecured claims

State the treatment: a percentage, a pot amount, or "all remaining funds." A pot plan — a fixed dollar amount distributed pro rata — is safer than a percentage plan, because a percentage plan requires the debtor to fund whatever the claims turn out to be.

Separate classification under § 1322(b)(1) is permitted but must not unfairly discriminate. The standard use is a class for co-signed consumer debts paid in full to protect the co-debtor under the § 1301 co-debtor stay. Be prepared to justify it.

Section 7: executory contracts and leases

Section 1322(b)(7) permits assumption or rejection under § 365. Specify each contract or lease, the treatment, and any cure amount. Residential leases and vehicle leases are the common ones.

Section 8: vesting

State when property of the estate vests in the debtor — at confirmation under § 1327(b), or on discharge or dismissal. This matters more than it appears: vesting at confirmation gives the debtor freedom to deal with property, while delayed vesting keeps post-petition assets in the estate and gives the trustee an interest in them. Local practice varies and trustees have preferences.

Section 9: nonstandard provisions

Anything not on the form goes here, and the notice checkbox in Section 1 must be checked. Common uses: committing tax refunds above a threshold, addressing a pending personal injury claim, providing for a sale of property, or specifying the effect of a post-confirmation loan modification.

Filing and the run-up to confirmation

File the plan with the petition or within fourteen days, Fed. R. Bankr. P. 3015(b).

Serve it as the local rule requires, and serve any valuation or lien avoidance motion under Rule 7004 — on an insured depository institution, that means certified mail to an officer.

Payments start within thirty days.

Section 341 meeting twenty-one to fifty days after filing. Bring photo identification and proof of Social Security number. Prepare the client: the trustee will ask about the schedules, the budget, transfers in the past year, expected tax refunds, and anything that looks unusual. Answer the question asked.

Proof of claim deadline is seventy days after the order for relief for non-governmental creditors under Rule 3002(c), 180 days for governmental units. Review every claim. Claims frequently overstate arrearages, include unauthorized fees, or are filed by parties without standing. Object where warranted; an unobjected claim is allowed under § 502(a).

Confirmation hearing under § 1324, not earlier than twenty and not later than forty-five days after the § 341 meeting.

Objections to expect

From the trustee: disposable income miscalculated, commitment period wrong, budget expenses excessive, liquidation analysis missing or understated, feasibility, tax returns not filed, support not current, and good faith.

From secured creditors: valuation, interest rate, the hanging paragraph, arrearage amount, and inadequate protection.

From unsecured creditors: rarely, but best interests and unfair discrimination when they appear.

Most objections resolve by amendment. Amend the plan rather than litigating a point the trustee is right about; the goodwill is worth more than the difference.

After confirmation

Section 1327(a) binds everyone. The plan is res judicata.

Watch the mortgage. Fed. R. Bankr. P. 3002.1 requires the mortgage servicer to give notice of payment changes at least twenty-one days before they take effect, to disclose post-petition fees within 180 days, and to respond to the trustee's notice of final cure. Non-compliance carries preclusion and fee-shifting under Rule 3002.1(i). Docket these, because servicer errors are common and the rule provides real remedies.

Modify when circumstances change, § 1329. This is what makes Chapter 13 survivable — a debtor whose income drops can lower the payment or extend the term, subject to the five-year cap. File promptly; arrears accumulate while counsel waits to see whether the situation resolves.

Post-petition debt requires trustee approval in most districts before incurring it — a replacement vehicle, a mortgage refinance, a medical obligation.

When the case cannot continue:

  • Convert to Chapter 7 under § 1307(a), a right the debtor cannot waive. Note Harris v. Viegelahn, 575 U.S. 510 (2015): undistributed plan payments held by the trustee return to the debtor.
  • Hardship discharge under § 1328(b), where failure is due to circumstances for which the debtor should not justly be held accountable, unsecured creditors have received the liquidation value, and modification is impracticable. The resulting discharge is narrower — all § 523(a) exceptions apply.
  • Dismissal under § 1307(c), restoring creditors to their pre-petition positions.

Completion. After all payments, the debtor certifies that domestic support obligations are current, completes the financial management course under § 111, and receives the discharge under § 1328(a). File the motions to avoid liens and to deem mortgages current where the plan contemplated them; a strip-off is not effective until the discharge enters and the order should be recorded.

Primary authority

A worked plan

The household: two wage earners, combined gross of $101,000, above the state median for a family of four. A home worth $340,000 with a first mortgage of $296,000 and $17,400 in arrears, and a second mortgage of $52,000. A 2019 vehicle purchased in 2020, worth $11,000, with a loan balance of $14,800. Credit card and medical debt of $46,000. Priority income taxes of $6,200 from two years ago. A 401(k) with $38,000. Checking of $2,100.

Commitment period. Above median: sixty months.

The second mortgage. The home is worth $340,000; the first is $296,000. There is $44,000 of equity behind the first, so the second is partially secured and cannot be stripped. Had the appraisal come in below $296,000, the entire $52,000 would drop into the unsecured pool and the case would look completely different. Order a real appraisal, not an automated valuation — this single number is worth more than every other decision in the case.

Arrears. $17,400 over sixty months is $290 per month. Ongoing mortgage payments run through the trustee if the district requires conduit.

The vehicle. Purchased more than 910 days before filing, so the hanging paragraph does not apply. Cram down to $11,000 at the district's Till rate — say six and a half percent — which is roughly $215 per month, with $3,800 dropping into the unsecured pool. A motion to value is filed with the plan.

Priority taxes. $6,200 paid in full over sixty months: about $103 per month.

Best interests floor. Equity of $44,000 minus the second mortgage of $52,000 is zero. The 401(k) is excluded from the estate entirely under § 541(c)(2) and Patterson v. Shumate, 504 U.S. 753 (1992). The checking account is largely exempt. Non-exempt equity is near zero, so the liquidation floor is not binding — disposable income will drive the unsecured distribution.

Disposable income. Form 122C-2 applies the IRS standards. Assume the calculation yields $340 per month.

The plan payment. $290 (arrears) + $215 (vehicle) + $103 (taxes) + $340 (unsecured) = $948, plus the trustee's percentage of roughly ten percent and attorney fees paid through the plan. Call it $1,150 monthly, on top of the ongoing mortgage of about $2,050.

The question that decides the case. Can this household pay $3,200 every month for five years? The Form 122C calculation says yes because it uses IRS standards. Schedules I and J, built from actual spending, may say otherwise. Where the two diverge, believe the schedules — the IRS standards do not pay for a transmission.

If the answer is no, the honest options are surrendering the vehicle to remove $215, converting to Chapter 7 and surrendering the house, or not filing 13 at all. Saying that before confirmation is the whole value of the engagement.

Attorney fees, and how they get paid

Chapter 13 is unusual among consumer engagements in that counsel is paid largely from the plan rather than up front, and the mechanics deserve explanation to the client and attention from counsel.

The no-look fee. Most districts set a presumptively reasonable flat fee for a standard Chapter 13 case, approved without a detailed application under a standing order or local rule. It covers a defined scope — the petition, schedules, plan, § 341 meeting, confirmation, and routine post-confirmation work — and typically excludes contested matters, adversary proceedings, and modifications, which are compensated separately on application.

Amounts vary substantially by district, and several districts have adopted tiered structures with a higher fee for cases involving lien avoidance, valuation motions, or business debtors.

How it is paid. Commonly a modest retainer before filing with the balance through the plan, ahead of unsecured creditors as an administrative expense under § 507(a)(2) and § 1322(a)(2). The practical effect is that a debtor with almost no money can obtain competent representation, which is the policy reason the structure exists.

Fee applications outside the no-look. Required for contested confirmations, motions for relief from stay, lien avoidance in some districts, adversary proceedings, and post-confirmation modifications. Contemporaneous time records are necessary; reconstructed ones are discounted.

Disclosure obligations. Section 329 and Fed. R. Bankr. P. 2016(b) require disclosure of all compensation paid or agreed to be paid within one year before filing, on the Rule 2016(b) statement, whether or not counsel is being paid through the plan. The court may order return of compensation that exceeds the reasonable value of services.

The debt relief agency rules. Sections 526 through 528 impose obligations on counsel as a "debt relief agency" — a written contract within five business days, specified disclosures, and restrictions on advice. Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010), upheld the framework and construed the advice restriction to reach only advice to incur debt in contemplation of abusing the bankruptcy process.

Practical instruction. Explain the fee arrangement in writing at intake, including what the no-look covers and what will require a separate application. Clients who understand that a contested valuation motion costs extra are not surprised when it does, and a Chapter 13 debtor surprised by a bill is a debtor who stops making plan payments.

Emergency filings

A foreclosure sale is Thursday. The client calls Tuesday. This happens constantly and it has its own procedure.

The skeleton petition. Fed. R. Bankr. P. 1007(c) permits filing the petition with a minimum set of documents — the petition itself, the creditor matrix, and the credit counseling certificate — with the balance due within fourteen days. Filing stops the sale under § 362(a).

What cannot be skipped. The credit counseling certificate under § 109(h) is a genuine prerequisite, and a case filed without it is subject to dismissal or striking. The briefing can be completed online in ninety minutes. Do it before filing, not after. The exigent-circumstances exception in § 109(h)(3) is narrow, requires a certification describing the circumstances and a request for services that could not be obtained within seven days, and is frequently denied.

Get the sale stopped in fact, not just in law. Fax or email the notice of filing with the case number to the foreclosing trustee, the lender's counsel, and the auctioneer, and confirm receipt by telephone. A sale conducted in violation of the stay is void or voidable, but unwinding it takes months and the property may have gone to a third party.

The fourteen-day cliff. Schedules, statement of financial affairs, Form 122C, and the plan are all due within fourteen days under Rule 1007(c) and Rule 3015(b). Cases filed as skeletons and never completed are dismissed automatically in most districts, and a dismissal has consequences beyond the immediate loss.

Repeat-filer stay limits. Section 362(c)(3) terminates the stay after thirty days where the debtor had a case dismissed within the preceding year, unless the court extends it on motion filed and heard within the thirty days on a showing of good faith. Section 362(c)(4) provides that no stay arises at all where two or more cases were dismissed in the preceding year, and a motion to impose the stay is required. Both deadlines are unforgiving and both require a hearing, not merely a filing — calendar them the day the case is filed.

In rem relief. Where a court has previously granted relief under § 362(d)(4) finding a scheme to hinder creditors involving multiple filings or transfers of the property, that order binds for two years and no automatic stay protects the property in a subsequent case.

Counsel the client honestly. An emergency filing buys time. It does not by itself save the house — the plan must cure the arrears and the household must sustain the payment. A filing made to postpone a sale, with no viable plan behind it, produces a dismissal, a stay-limitation problem in any future case, and the same foreclosure ninety days later.

The schedules, and why they decide the case

The plan gets the attention, but the schedules are what the trustee reads first and what every objection is built from.

Schedule I and Schedule J are the operative documents for a below-median debtor and remain important for an above-median one, because feasibility under § 1325(a)(6) is tested against actual budget rather than IRS standards. Build them from bank statements and receipts rather than from the client's estimate. A Schedule J showing $180 monthly for groceries for a family of four is not credible and invites scrutiny of everything else.

Where the schedules and Form 122C diverge, explain it. An above-median debtor whose disposable income under the means test exceeds what Schedule J shows is available will face a trustee objection, and the answer — that the IRS standards do not reflect this household's actual and necessary expenses — has to be documented and defensible.

Schedule A/B. Everything, including the items debtors forget: tax refunds not yet received, security deposits, anticipated inheritances within 180 days under § 541(a)(5), causes of action including personal injury and employment claims, business goodwill, cryptocurrency, and equitable interests. An undisclosed cause of action is the most damaging omission there is — judicial estoppel may bar the debtor from pursuing it later, and courts apply the doctrine unforgivingly.

Schedule C. Exemptions claimed by specific statute with amounts. Objections are due within thirty days after the conclusion of the § 341 meeting under Fed. R. Bankr. P. 4003(b), and Taylor v. Freeland & Kronz, 503 U.S. 638 (1992), holds that an unobjected exemption stands even if it was improper.

The Statement of Financial Affairs. Transfers in the past two years, payments to insiders in the past year, prior filings, closed accounts, and losses. This is where preference and fraudulent transfer exposure surfaces, and where a trustee decides how carefully to look at everything else.

Amendments. Freely permitted under Rule 1009 before the case is closed, and far better made voluntarily than after a trustee finds the omission. An amendment filed the week of the § 341 meeting reads as diligence; one filed after examination reads as concealment.

The signature. The debtor signs under penalty of perjury, and 18 U.S.C. § 152 makes a false statement in a bankruptcy case a felony. Review every schedule with the client line by line before signing, and document that you did.

Keeping the case alive

Confirmation is the midpoint, not the end. Cases fail after confirmation far more often than before it, and the failures are predictable.

Set up the wage order immediately. Cases funded by voluntary payments fail at substantially higher rates than cases funded by employer deduction. Where the debtor's income is from wages, the income deduction order under § 1325(c) should issue at confirmation and be verified with the employer's payroll department by telephone.

Watch for the first missed payment. Trustees file motions to dismiss on default, typically with a short cure period. The moment a payment is missed, the answer is either an immediate cure or a modification motion under § 1329 — not a hope that it works out. Waiting is what kills cases.

Diary the annual events. Tax returns must be filed each year and, in most districts, provided to the trustee. Where the plan commits refunds, the client must be reminded before the refund is spent.

Anticipate the insurance lapse. A vehicle whose insurance lapses generates a motion for relief from stay within weeks. Tell the client at confirmation that the trustee and the lender both monitor this.

Handle the life events. A job change, a new child, a separation, a medical event, or a death in the household all change the numbers. Each is a basis for modification, and each is an opportunity to fix a plan that was tight to begin with.

Post-confirmation borrowing requires trustee approval in most districts. A debtor who finances a replacement vehicle without approval has violated the plan.

Track the mortgage. Under Rule 3002.1 the servicer must give notice of payment changes and disclose post-petition fees. Escrow adjustments change the ongoing payment and, in a conduit district, the plan payment. A debtor whose mortgage payment rose $180 and whose plan payment did not is accruing a post-petition default nobody has noticed.

Prepare for the end. In the final six months, reconcile with the trustee: confirm the claims paid, the arrearage cured, and any remaining balance. File the § 1328 certifications, complete the financial management course, and — where the plan stripped a lien or avoided one — obtain and record the order. A discharge that leaves an unreleased junior mortgage on title has accomplished less than the client believes.

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This guide is provided for general informational purposes and does not constitute legal advice. Chapter 13 debt limits adjust every three years and have changed recently; confirm the current figures before assessing eligibility. Local practice varies substantially among districts — plan forms, conduit mortgage requirements, customary interest rates, no-look fee amounts, and lien avoidance procedure are all district-specific. Consult a qualified consumer bankruptcy attorney admitted in the district before filing.