Plan Structure Under § 1322

Section 1322 governs Chapter 13 plan content. The plan is the debtor's proposal for how creditors will be paid over 3-5 years. This page covers required and permissive plan provisions and how they're typically structured.

Mandatory plan provisions (§ 1322(a))

Every Chapter 13 plan must:

• Submit such portion of future earnings as is necessary for execution of the plan
• Provide for full payment, in deferred cash payments, of all priority claims
• If the plan classifies claims, provide the same treatment for each claim within a particular class
• Notwithstanding any other provision of section 1322, provide for payment of domestic support obligations in full
• (More recent amendments) provide for the payment of postpetition § 1305 priority claims

Permissive plan provisions (§ 1322(b))

The plan may also:

• Designate classes of unsecured claims
• Modify the rights of secured creditors (other than residential mortgage holders) and of unsecured claim holders
• Cure or waive any default within a reasonable time
• Provide for any other appropriate provision not inconsistent with the chapter

The anti-modification rule for primary residence

Section 1322(b)(2)'s parenthetical: the plan may modify rights of secured creditors "other than a claim secured only by a security interest in real property that is the debtor's principal residence." This means residential mortgages cannot be crammed down (their secured claim cannot be reduced to current home value).

Important exception: under-secured junior mortgages (where the home is worth less than the senior mortgage balance) can be "stripped" because there's no actual equity supporting the junior lien. This is the lien-strip strategy in Chapter 13.

Plan duration

Plans run 3 or 5 years depending on income:

• Below-median income: plan runs 3 years (with court permission to extend up to 5)
• Above-median income: plan runs 5 years (per § 1325(b)(4))

Common plan structures

Three typical patterns:

The "no-pot" plan

All disposable income goes to the trustee, who pays priority debts (taxes, support arrearages) first, then secured-debt arrearages, then unsecured creditors pro-rata. Used when unsecured pool is small.

The 100% plan

Plan pays unsecured creditors 100 cents on the dollar. Used when debtor has sufficient income to pay all debt over the plan period. Often required when debtor cannot pass the disposable-income best-efforts test otherwise.

The "pot plan"

Specific dollar amount allocated to unsecured creditors as a class; the percentage paid depends on total claims filed. Common when projecting allowed claims is uncertain.