Chapter 13 Payments in New York

Your Chapter 13 payment must satisfy three tests:

1. Disposable income test. All projected disposable income (income minus allowed expenses) must go to the plan. Above-median filers ($66,973+ for 1 person in NY) use the means test expense deductions. Below-median filers use actual expenses.
2. Best-interests test. Unsecured creditors must receive at least as much as they would get in a Chapter 7 liquidation. If you have non-exempt assets worth $10,000, unsecured creditors must get at least $10,000 over the plan.
3. Feasibility test. You must actually be able to make the proposed payment given your budget.

The Chapter 13 trustee receives your payment and distributes it:

1. Trustee commission: Typically 5-10% of plan payments
2. Attorney fees: Your attorney's fees are often paid through the plan
3. Secured debt arrears: Mortgage catch-up payments, car loan payments
4. Priority debts: Recent tax debts and child support arrears (must be paid in full)
5. Unsecured creditors: Credit cards, medical bills, personal loans (receive whatever is left, often 0-10%)

Your regular ongoing mortgage payment is usually paid directly by you, not through the plan (though some districts require plan payment of the ongoing mortgage).

If You Miss a Payment

• The trustee may file a motion to dismiss your case
• You typically have a short window to catch up before the hearing
• Repeated delinquency signals the plan is not feasible
• If dismissed, you lose automatic stay protection and creditors resume collection

Modifying Your Plan

• Income drop: File a motion to reduce payments or extend the plan (up to 60 months max)
• Income increase: The trustee or creditors may request higher payments
• New emergency expense: Medical bills, car repairs - can justify modification
• Conversion option: You can convert to Chapter 7 if you qualify and can no longer afford any plan