How much will my Chapter 13 payment be?

It depends on your disposable income, secured debt arrears, priority debts (taxes, support), and the value of any non-exempt property. The plan payment is calculated individually for each case.

Can I save my home with Chapter 13?

Yes. Chapter 13 is the primary legal tool for stopping foreclosure and curing mortgage arrears over 3-5 years [§ 11 U.S.C. § 1322(b)(5)]. You must resume regular monthly payments and complete the plan.

What happens if I miss a Chapter 13 payment?

A missed payment triggers a notice from the trustee. Multiple missed payments can lead to a motion to dismiss the case [§ 11 U.S.C. § 1307(c)], which lifts the [def:automatic stay]. If your income changes, contact your attorney to modify the plan.

Can I pay off my Chapter 13 plan early?

Yes, in most cases. If you receive a lump sum (tax refund, inheritance, bonus), you may be able to pay off the plan early and receive your [def:discharge] sooner [§ 11 U.S.C. § 1328]. Some modifications may be required.

What is a 'cramdown' in Chapter 13?

If your car loan is more than 910 days old, Chapter 13 may allow you to reduce the loan balance to the vehicle's current value (the "cramdown" provision) [§ 11 U.S.C. § 1325(a)]. This can significantly reduce your car payment.

Topic guideUpdated 2026-02-27

Alabama Chapter 13 Bankruptcy — Repayment Plans

How Chapter 13 repayment plans work — saving your home, plan payments, cramdown, and discharge after completion.

Chapter 13 allows individuals with regular income to reorganize their debts into a manageable repayment plan lasting 3 to 5 years §11 U.S.C. § 1322. Unlike Chapter 7, you keep all of your property and catch up on secured debts over time.

How Chapter 13 works

Credit counseling

Same requirement as Chapter 7 — an approved credit counseling course within 180 days before filing §11 U.S.C. § 109(h).

Filing and plan proposal

Your attorney files the petition along with a proposed repayment plan. The plan specifies how much you will pay monthly and how each class of debt will be treated §11 U.S.C. § 1322.

Automatic stay begins

All collection activity stops immediately upon filing §11 U.S.C. § 362. This is especially valuable for stopping foreclosure, as it gives you time to propose a plan to cure mortgage arrears.

341 Meeting of creditors

Similar to Chapter 7, you attend a brief meeting where the trustee reviews your plan and finances.

Plan confirmation

The court holds a confirmation hearing to determine whether the plan meets all legal requirements §11 U.S.C. § 1325: good faith, best interests of creditors, and commitment of all disposable income.

Monthly payments

You make regular payments to the Chapter 13 trustee, who distributes funds to creditors according to the confirmed plan.

Discharge

After completing all plan payments (3-5 years), remaining qualifying unsecured debts are discharged §11 U.S.C. § 1328.

When Chapter 13 is the better choice

You are behind on your mortgage and want to save your home from foreclosure
You earn too much to pass the Chapter 7 Means test
You have non-exempt property you want to keep
You need to address tax debts, student loans, or domestic support arrears in a structured way
You have a co-signer you want to protect from collection

How the plan payment is calculated

Your monthly plan payment depends on:

Your disposable income (income minus reasonable living expenses)
The amount needed to cure secured debt arrears (mortgage, car loan)
Priority debts that must be paid in full (taxes, child support)
The "best interests" test — unsecured creditors must receive at least what they would have gotten in a Chapter 7 liquidation

Alabama-specific considerations

Because Alabama requires state exemptions, your plan payment calculation depends on which exemptions protect your property. The "best interests" test means creditors must receive at least as much as they would in a Chapter 7 case — so higher exemptions can actually reduce your Chapter 13 payment.

✓Chapter 13 can save a home from foreclosure. The plan can spread mortgage arrears over 3-5 years while you resume regular monthly payments.

Timeline at a glance

Plan length: 3 years (below-median income) to 5 years (above-median income)
Confirmation hearing: scheduled by the court after filing
Credit report impact: remains for 7 years from filing date

⚠Missing plan payments can result in case dismissal, which lifts the automatic stay and exposes you to the collection actions you were trying to stop. Communicate with your attorney if your income changes.

Prepare for Your Consultation

Quick checklist (Bankruptcy)

If there is a deadline (garnishment / foreclosure), include dates.

Recent pay stubs

and income info

Debt list

(cards, loans, balances)

Collection letters

or court papers

General preparation tips only. Eligibility and timing depend on facts.

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