Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

How Much Do You Need to Be Able to Pay in Chapter 13?

It’s one of the most important questions debtors can ask, particularly if their incomes are above the median for their state and they don’t expect to pass the means test. There are three tests the Bankruptcy Code applies to debtors’ repayment plans before they can be confirmed. A plan must pass all three tests and the one with the highest dollar figure will be the amount a debtor will repay. Although they appear in Section 1325, they aren’t grouped together, and what follows are descriptions, not formal names.

(1)  The priority claims test. A repayment plan must pay all priority claims in full. If priority claims are the bulk of a debtor’s debts, then this test will show how much they will need to pay.

(2)  The best interests of the creditors test. The plan must distribute as much or more to the creditors as if the debtor had filed a chapter 7 bankruptcy.

(3)  The best efforts test. If the debtor’s (non-priority) debts cannot be completely repaid during the plan, then the debtor must promise to dedicate all of his or her “disposable income” under the plan. Practically speaking, in New York, debtors who do not promise to pay something to their unsecured creditors will fail this test. Elsewhere trustees are more lenient. Debtors proposing 100 percent repayment plans will need to pass this test easily.

Although these tests are fairly straightforward, it’s very important to reiterate that the value from the highest one determines the size of the payments. Passing the best interests of the creditors test is probably the most obviously straightforward as no creditor or the trustee would accept anything less than what they could get in chapter 7. Likewise, debtors with large priority claims will look to those as the upper limit to what they can propose. Finally, so long as the other two tests are met, debtors who still cannot pay all of his or her unsecured debts, can promise all of their disposable income to remain in chapter 13.

Because chapter 13 requires a closer look at the character of the debtor’s obligations, it’s crucial to plan it with an experienced New York bankruptcy lawyer.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Chapter 13 Bankruptcy Lawyer Brooklyn NY Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »

What Is a ‘Pot Plan’ in Chapter 13 New York Bankruptcy?

The answer has to do with paying money into a pot, not other kinds of pots. There is surprising flexibility in how debtors can structure their repayment plans in chapter 13 New York bankruptcy, especially as they apply to unsecured creditors. The reason for this flexibility isn’t simply to give debtors more options; rather, it’s

Read More »

Good Math Skills Needed When Amending a Chapter 13 Plan

New York bankruptcy lawyers aren’t always known for their math skills. In fact, there are many jokes about lawyers as liberal arts majors who can’t do math or science. The issue of lawyers and math, however, is quite serious in consumer bankruptcy, which can be “numbers intensive.” Unfortunately, easy math mistakes can plague a chapter

Read More »

Bruce Weiner named a member of the 2021 New York Super Lawyers

Bruce L. Weiner, a partner at Rosenberg Musso & Weiner LLP, Brooklyn bankruptcy attorneys, has been named a 2021 New York Super Lawyer. This list recognizes only five percent of lawyers in the state. Super Lawyers, a part of Thomson Reuters, is a rating service, research-driven and peer-influenced, that lists outstanding lawyers who’ve attained a

Read More »

Options for Debtors Whose Co-Signers File Bankruptcy

It’s one thing to consider filing New York bankruptcy when you run into financial problems, but it’s another thing entirely when a co-signer of a debt files bankruptcy. The co-signer who is doing fine might suddenly find himself or herself in serious trouble. Here are some things for co-signers to consider should a co-debtor file

Read More »
Scroll to Top