§ 86.1     In General
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 86.1, at ¶ ____, LundinOnChapter13.com (last visited __________).

The Bankruptcy Code does not prescribe an exact percentage or amount that must be paid to unsecured claim holders to confirm a Chapter 13 plan. Instead, several sections of the Code work together to define a range of possible payments of unsecured claims that would satisfy the confirmation criteria.


Unsecured claim holders are at least entitled to the amount that would be paid if the estate were liquidated under Chapter 7—the best-interests-of-creditors test.1 Upon objection to confirmation by the holder of an allowed unsecured claim or by the trustee, the debtor must commit to the plan all projected disposable income for at least three years beginning on the date the first payment is due under the plan—the disposable income test.2 The most the plan can pay to unsecured claim holders is the maximum available given the debtor’s budget and other financial constraints—the feasibility test.3 No matter how well intentioned the debtor, the plan cannot exceed five years in duration and is permitted to extend beyond three years only if the debtor demonstrates cause.4 There is dispute whether cause includes payment of a greater percentage of unsecured claims.5 A significant number of courts include within the good-faith analysis under § 1325(a)(3) some consideration of the percentage of repayment of unsecured claims.6


Unsecured claim holders do not vote on confirmation of Chapter 13 plans.7 The principal way for an unsecured claim holder to protect its rights in a Chapter 13 case is to object to confirmation.8


1  11 U.S.C. § 1325(a)(4). See discussion beginning at § 90.1  In General: Plan Payments vs. Hypothetical Liquidation.


2  11 U.S.C. § 1325(b)(1)(B). See discussion beginning at § 91.1  In General.


3  11 U.S.C. § 1325(a)(6). See § 198.1 [ Able to Make Payments and Comply with Plan ] § 111.1  Able to Make Payments and Comply with Plan.


4  11 U.S.C. § 1322(d). See discussion beginning at § 112.1  General Rule: Three Years, More or Less.


5  See § 201.1 [ Cause for Extension beyond Three Years ] § 112.4  Cause for Extension beyond Three Years.


6  See § 195.1 [ Percentage of Payment ] § 108.3  Percentage of Payment.


7  Contrast the right of the holder of an allowed secured claim to “accept” the plan in 11 U.S.C. § 1325(a)(5)(A). See § 101.2 [ Acceptance of Plan ] § 74.3  Acceptance of Plan before BAPCPA.


8  See discussion beginning at § 116.1  Standing to Object.