What has to be paid into a Chapter 13 plan?
A Chapter 13 bankruptcy requires certain debts to be repaid over three to five years. Debts are assigned different classifications; e.g., priority claims, secured claims and unsecured claims. Priority claims include domestic support obligations like child support, certain taxes, and attorney and trustee fees. Secured claims are those debts that give creditors the right to collateral – an example of this is a loan on a car. If the loan isn’t paid back, the creditor can repossess the car. Unsecured claims are those debts that give creditors no rights to collateral. In a Chapter 13 bankruptcy, priority claims are required to be paid in full through the plan.
A debtor filing under Chapter 13 needs to have enough regular income to be able to pay at least those priority claims. In the case of a secured claim, like a car, the debtor has to pay back at least the value of the collateral in order to keep the collateral. In some cases, depending on when the collateral was purchased, the full value may need to be paid. In some cases, the collateral can be paid for outside of the plan. If a debtor is behind on loan payments of collateral like a house or a car then the arrearage can be paid into the plan to allow the debtor to keep the house or car. Unsecured claims in a Chapter 13 bankruptcy do not need to be paid in full as long as they receive the full amount of any projected disposable income and they receive what they would have received in a Chapter 7 bankruptcy.