Chapter 13 Plan-How Many Years?

As a Fort Lauderdale bankruptcy attorney, we must address this issue in every chapter 13 case.   A chapter 13 plan is a minimum of  three and a maximum of five years.  Sometimes a client may need the full five years, such as to catch up on a mortgage.

The bankruptcy law changed in 2005 and provided that a debtor who earned below the median income of the state could file a chapter 13 plan for only three years.  A debor who earned above the median income of the state had to make payments during a five year plan.  However,  based on the statutory language, there  has been an argument that even above median debtors only had to make payments over three years if the means test showed nothing had to be paid to unsecured creditors.   Deductions from income could be made in the means test, such as high mortgage payments, medical expenses,  and health insurance.  After these deductions were made, the means test might show that nothing had to be paid to unsecured creditors.  In this circumstance, the argument was that if a debtor still needed to be in chapter 13, he or she only had to be in a chapter 13 for three years despite having a high income.

The Eleventh Circuit Court of Appeals,  in  Whaley v Tennyson,  held that the above median income debtor in chapter 13 must submit a five year plan.  The reasoning is in part based on the Supreme Court case Hamilton v Lanning,  which was discussed in a prior post.  This court opinion is binding in Florida bankruptcy cases.

As a Ft. Lauderdale bankruptcy lawyer, we have been able to file 3 year plans for above median debtors.  After Tennyson , we will need to submit 5 year plans in these cases.

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