Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 13– ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME

Sub Chapter II – The Plan

Sec. 1325. Confirmation of plan

    (a) Except as provided in subsection (b), the court shall confirm a 
plan if--
        (1) The plan complies with the provisions of this chapter and 
    with the other applicable provisions of this title;
        (2) any fee, charge, or amount required under chapter 123 of 
    title 28, or by the plan, to be paid before confirmation, has been 
    paid;
        (3) the plan has been proposed in good faith and not by any 
    means forbidden by law;
        (4) the value, as of the effective date of the plan, of property 
    to be distributed under the plan on account of each allowed 
    unsecured claim is not less than the amount that would be paid on 
    such claim if the estate of the debtor were liquidated under chapter 
    7 of this title on such date;
        (5) with respect to each allowed secured claim provided for by 
    the plan--
            (A) the holder of such claim has accepted the plan;
            (B)(i) the plan provides that the holder of such claim 
        retain the lien securing such claim; and
            (ii) the value, as of the effective date of the plan, of 
        property to be distributed under the plan on account of such 
        claim is not less than the allowed amount of such claim; or
            (C) the debtor surrenders the property securing such claim 
        to such holder; and

        (6) the debtor will be able to make all payments under the plan 
    and to comply with the plan.

    (b)(1) If the trustee or the holder of an allowed unsecured claim 
objects to the confirmation of the plan, then the court may not approve 
the plan unless, as of the effective date of the plan--
        (A) the value of the property to be distributed under the plan 
    on account of such claim is not less than the amount of such claim; 
    or
        (B) the plan provides that all of the debtor's projected 
    disposable income to be received in the three-year period beginning 
    on the date that the first payment is due under the plan will be 
    applied to make payments under the plan.

    (2) For purposes of this subsection, ``disposable income'' means 
income which is received by the debtor and which is not reasonably 
necessary to be expended--
        (A) for the maintenance or support of the debtor or a dependent 
    of the debtor, including charitable contributions (that meet the 
    definition of ``charitable contribution'' under section 548(d)(3)) 
    to a qualified religious or charitable entity or organization (as 
    that term is defined in section 548(d)(4)) in an amount not to 
    exceed 15 percent of the gross income of the debtor for the year in 
    which the contributions are made; and
        (B) if the debtor is engaged in business, for the payment of 
    expenditures necessary for the continuation, preservation, and 
    operation of such business.

    (c) After confirmation of a plan, the court may order any entity 
from whom the debtor receives income to pay all or any part of such 
income to the trustee.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2649; Pub. L. 98-353, title III, 
Secs. 317, 530, July 10, 1984, 98 Stat. 356, 389; Pub. L. 99-554, title 
II, Sec. 283(y), Oct. 27, 1986, 100 Stat. 3118; Pub. L. 105-183, 
Sec. 4(a), June 19, 1998, 112 Stat. 518.)


                      Historical and Revision Notes

                         legislative statements

    Section 1325(a)(5)(B) of the House amendment modifies the House bill 
and Senate amendment to significantly protect secured creditors in 
chapter 13. Unless the secured creditor accepts the plan, the plan must 
provide that the secured creditor retain the lien securing the 
creditor's allowed secured claim in addition to receiving value, as of 
the effective date of the plan of property to be distributed under the 
plan on account of the claim not less than the allowed amount of the 
claim. To this extent, a secured creditor in a case under chapter 13 is 
treated identically with a recourse creditor under section 1111(b)(1) of 
the House amendment except that the secured creditor in a case under 
chapter 13 may receive any property of a value as of the effective date 
of the plan equal to the allowed amount of the creditor's secured claim 
rather than being restricted to receiving deferred cash payments. Of 
course, the secured creditors' lien only secures the value of the 
collateral and to the extent property is distributed of a present value 
equal to the allowed amount of the creditor's secured claim the 
creditor's lien will have been satisfied in full. Thus the lien created 
under section 1325(a)(5)(B)(i) is effective only to secure deferred 
payments to the extent of the amount of the allowed secured claim. To 
the extent the deferred payments exceed the value of the allowed amount 
of the secured claim and the debtor subsequently defaults, the lien will 
not secure unaccrued interest represented in such deferred payments.


                        senate report no. 95-989

    The bankruptcy court must confirm a plan if (1) the plan satisfies 
the provisions of chapter 13 and other applicable provisions of title 
11; (2) it is proposed in good faith; (3) it is in the best interests of 
creditors, and defined by subsection (a)(4) of Section 1325; (4) it has 
been accepted by the holder of each allowed secured claim provided for 
the plan or where the holder of any such secured claim is to receive 
value under the plan not less than the amount of the allowed secured 
claim, or where the debtor surrenders to the holder the collateral 
securing any such allowed secured claim; (5) the plan is feasible; and 
(6) the requisite fees and charges have been paid.
    Subsection (b) authorizes the court to order an entity, as defined 
by Section 101(15), to pay any income of the debtor to the trustee. Any 
governmental unit is an entity subject to such an order.


                               Amendments

    1998--Subsec. (b)(2)(A). Pub. L. 105-183 inserted before semicolon 
``, including charitable contributions (that meet the definition of 
`charitable contribution' under section 548(d)(3)) to a qualified 
religious or charitable entity or organization (as that term is defined 
in section 548(d)(4)) in an amount not to exceed 15 percent of the gross 
income of the debtor for the year in which the contributions are made''.
    1986--Subsec. (b)(2)(A). Pub. L. 99-554 substituted ``; and'' for 
``; or''.
    1984--Subsec. (a). Pub. L. 98-353, Sec. 317(1), substituted ``Except 
as provided in subsection (b), the'' for ``The''.
    Subsec. (a)(1). Pub. L. 98-353, Sec. 530, inserted ``the'' before 
``other''.
    Subsecs. (b), (c). Pub. L. 98-353, Sec. 317(2), (3), added subsec. 
(b) and redesignated former subsec. (b) as (c).


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-183 applicable to any case brought under an 
applicable provision of this title that is pending or commenced on or 
after June 19, 1998, see section 5 of Pub. L. 105-183, set out as a note 
under section 544 of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-554 effective 30 days after Oct. 27, 1986, 
see section 302(a) of Pub. L. 99-554, set out as a note under section 
581 of Title 28, Judiciary and Judicial Procedure.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1307, 1322, 1329, 1330 of 
this title.


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