DAY 13 — How Chapter 13 Payments Are Calculated
Week: Week 2: Decision
Intent: High-Intent | Chapter 13 Payment
Your Chapter 13 monthly payment is based on your disposable income, what you owe on secured debts, and the minimum creditors must receive. Learn how it's calculated.
Your Chapter 13 monthly payment is based on your disposable income after allowed expenses. It must be enough to pay secured creditors in full (like mortgage arrears and car payments), priority debts (like taxes), and whatever is left goes to unsecured creditors. Plans typically range from $300 to $2,000+ per month depending on your situation.
The Three Components of Your Payment
1. Priority Debts (Must be paid in full)
Recent taxes, child support arrears, domestic support obligations. These must be paid 100 cents on the dollar through your plan.
2. Secured Debts (Paid according to the value of collateral)
Mortgage arrears, car loans. You pay what it takes to keep the asset and cure any defaults. These are fixed obligations.
3. Unsecured Debts (Whatever disposable income remains)
Credit cards, medical bills. They receive what's left after secured and priority debts are covered — sometimes 10 cents on the dollar, sometimes more.
What Is 'Disposable Income'?
The bankruptcy code calculates your disposable income by subtracting allowed living expenses from your current monthly income. These allowances follow IRS standards and actual expenses. What's left is what you pay into the plan each month.
Duration: 3 vs 5 Years
If your income is below Maryland's median, you can propose a 3-year plan. Above the median, you're required to propose a 5-year plan. Longer plans mean lower monthly payments but more total paid to unsecured creditors.
What Gets You a Lower Payment
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Lower income (closer to or below median)
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Higher allowable living expenses (large household, medical needs)
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Less priority and secured debt
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Fewer non-exempt assets that would force higher unsecured payback
Maryland-Specific Insight
Maryland's bankruptcy trustees examine Chapter 13 plans carefully. Plans that seem to underestimate income or overstate expenses may be challenged. An attorney experienced in the District of Maryland knows how local trustees evaluate plans and will draft accordingly.
Reality Check
Chapter 13 payments are real and must be maintained for 3–5 years. Before filing, it's critical to assess honestly whether your budget can sustain the payment. A plan you can't maintain won't save your home — it will just delay the outcome.
Related Questions
→ Is Chapter 13 Better Than Chapter 7?
→ What Happens If I Miss a Chapter 13 Payment?
→ Can I Catch Up on Mortgage Payments in Chapter 13?
→ How Chapter 13 Stops Foreclosure?
