Chapter 13 Plan - Definition

All Chapter 13 plans must be confirmed by the Court to be enforceable

Chapter 13 Plan - Legal Definition

The legal definition of "Chapter 13 Plan" - To maintain a case under Chapter 13, all debtors must submit a proposal to the Court which explains how creditors will be paid. The proposal, know as a "plan" of reorganization for wage earners, must include payment of all disposable income to the trustee, who in turn, disburses funds for the benefit of creditors.

All Chapter 13 plans must last at least 36 months. Additionally, if a debtor earns more than the state median income, Chapter 13 plans must last 60 months. Of course, if all amounts owed are repaid before the expiration of the plan term, then the plan does not require additional payments. The basic principal applies to all Chapter 13 plans - debtors must contribute all disposable income to the plan for disbursement by the trustee for the benefit of creditors.

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