Determining the amount of your Chapter 13 Plan can be quite complicated, and it is certainly best left to your attorney. But if you’re curious, here are some general guidelines.
First, at a bare minimum, your plan must adequately provide for secured and priority creditors.
If you have a car loan, that has to be paid through the plan. Whether you’re paying off the contract amount at the contract rate, or if you’re cramming it down, there has to be enough money to pay for the car over the lifetime of the plan.
If you were behind on your mortgage on the day you filed, there has to be enough money in the plan to pay those mortgage “arrears” over the course of the plan. Same thing with property taxes or HOA dues: if you were behind on them on the day you filed, there has to be enough money in your plan so that by the time it’s done, those secured debts will be paid off.
For most people, priority debt means income taxes, but it also includes government fines and penalties, unemployment compensation overpayments, and child support arrears. There will have to be enough money in your plan to cover these debts, too.
Second, your plan has to address the amount your unsecured creditors will receive.
If you have assets over your state’s exemption limits, then your unsecured creditors must, at a minimum, receive the amount by which you’re over those limits. (That’s because they cannot be treated any worse in Chapter 13 than they would have been in Chapter 7, and in Chapter 7 your non-exempt property would have been liquidated and distributed among them.)
Next, you look at the Chapter 13 Means Test. The Chapter 13 Means Test is bizarre and complicated, but its bottom line is this: You enter your average income for the past six months into a formula, and you end up with the minimum amount that Congress thinks you should be able to afford to pay your unsecured creditors per month over the life of your plan.
Note: You don’t have to pay the Means Test amount plus the nonexempt property amount; You play whichever one is higher.
Third, you plan has to cover administrative fees. If you didn’t pay your lawyer 100% of his or her attorney fee pre-filing, the remainder will be paid through your plan. Also, the Trustee will take his or her administrative fee. (In the district where I practice, that’s 9.5%.)
Finally, you have to look at your actual anticipated income and expenses, which you listed on your schedules. You must commit your full monthly net income (actual income minus actual expenses) to your plan. For example, If you’ve done the above calculations and come up with a plan that is $850 per month, but your monthly net income says you are able to pay $1,200 per month, then you will have to pay $1,200.
Of course there are many, many exceptions and caveats to the foregoing. This is just to give you a general idea of what factors go into arriving at the number you will propose to the Court and Trustee. If you are considering filing a Chapter 13 case, I urge you to speak with an experienced bankruptcy attorney first.