Bankruptcy Mastery

Becoming a better bankruptcy lawyer

  • Home
  • About Cathy
  • Contact Cathy
  • Articles by Topic
    • Attorneys fees
    • Bankruptcy Practice
    • Before filing
    • Business bankruptcy
    • Cases new & significant
    • Counseling clients
    • Family Law in Bankruptcy
    • Means test
    • Opinionated
    • Real property
    • Rule 3002.1
    • Tax
  • Table of Contents
  • Start Here

What Goes In The Chapter 13 Pot

By Cathy Moran, Esq. Filed Under: Chapter 13

The rookie bankruptcy lawyer called up to ask if the Chapter 13 plan had to provide the DMI amount in addition to the liquidation amount.

Whoa!  That’s taking good faith to an extreme.  These are two different measures of what unsecured creditors are entitled to under Chapter 13.  Section 1325(a)(4) requires that creditors get at least what they  would have gotten had the case been filed under Chapter 7.

A second provision, 1325(b)(1) provides that unsecured creditors get the debtor’s projected disposable income over the applicable commitment period.

How do these two tests relate to each other? They are alternatives, and the debtor must commit the greater of those two numbers to the payment of unsecured claims.

Note that both tests measure what “unsecured” creditors get.  A priority claim is, by definition, an unsecured claim.  So a plan driven by the disposable income calculation from the means test can pay the priority claims from that pot.

Likewise, the liquidation test, the test looking at what creditors would get in a Chapter 7 liquidation, fixes what unsecureds get.

So if there are secured claims to be paid through the plan, more money must be committed to pay secured claims and the costs of administration.

More

Chapter 13 pot plan

Pot plan vs. percentage plan

Image courtesy of freeaussiestock.com

More from my site

  • Battle On When Bank Back Tracks On Home Loan BalanceBattle On When Bank Back Tracks On Home Loan Balance
  • The Best Reason To Reduce Chapter 13 PaymentsThe Best Reason To Reduce Chapter 13 Payments
  • New Year’s Resolutions:  What Challenges MeNew Year’s Resolutions: What Challenges Me
  • Newbie Summer Reading:  Johnson v. Home State BankNewbie Summer Reading: Johnson v. Home State Bank
  • Bankruptcy Attorney As StorytellerBankruptcy Attorney As Storyteller
  • Why Realization Dawns Too LateWhy Realization Dawns Too Late

Filed Under: Chapter 13

[footer_backtotop]

Copyright © 2025 ·Prose · Genesis Framework by StudioPress · WordPress

Theme customization by Rowboat Media LLC