Under a Chapter 13 Plan, all Creditors must receive at least as much as they would have in a case of liquidation of assets under Chapter 7 of the Bankruptcy Code. Usually all of the surplus income of the Debtor and the Debtor's spouse for a three-year period must be paid to the Chapter 13 Trustee. Disposable income is income received by the Debtor and his or her spouse that is not reasonably necessary for the support of the Debtor and the Debtor's dependents. Treatment of Secured Creditors Arrears owed to a secured creditor can be cured within the Plan. It is important to understand that a creditor has a secured claim only to the extent of the value of its security, which cannot exceed the value of the property securing the claim.
Home mortgages have special rules under recent amendments.
The Meeting of Creditors is usually held about a month after the case is filed. In addition, the Chapter 13 Trustee assesses a fee of 10 percent on all payments made under the Plan. These court filing fees are in addition to the fee charged by the Debtor's attorney, and are paid directly to the Court. Within a few days after the case is filed, the Court will mail a notice to all Creditors advising them of the automatic stay. Certain Creditors may be notified sooner, if necessary.