Chapter 13 Payments in Phoenix

How Chapter 13 Payments Are Calculated

Your monthly payment is based on several factors:

Disposable income: Income minus allowed living expenses as determined by the means test
Secured debt obligations: Mortgage arrears, car payments, and other secured debts that must be paid through the plan
Priority debts: Tax debts, domestic support obligations, and other priority claims must be paid in full
Best-interest-of-creditors test: Unsecured creditors must receive at least as much as they would in a Chapter 7 liquidation
Trustee fee: The Chapter 13 trustee takes a percentage (typically 4-10%) of each payment for administrative costs

What Gets Paid Through the Plan

Paid in Full (100%)

Mortgage arrears (to cure default)
Priority tax debts
Domestic support arrears
Administrative expenses (trustee fees, attorney fees)
Secured debt payments (car loans, etc.)

Paid Partially (Often Pennies on Dollar)

Credit card balances
Medical bills
Personal loans
Payday loans
Remaining unsecured debt (whatever your disposable income allows)

Plan Length and Arizona Income

Below median income ($56,381 for 1 person in Arizona): Minimum plan is 36 months (3 years), maximum is 60 months (5 years)
Above median income: Plan must be 60 months (5 years)
Arizona has flat 2.5% state income tax: State income tax is an allowed deduction on the means test, reducing your disposable income and potentially lowering plan payments.
First payment due within 30 days of filing. Payments are typically made via wage deduction or direct payment to the trustee.

What Happens If You Miss a Payment

Missing Chapter 13 payments is the number one reason cases are dismissed. If you fall behind:

The trustee may file a motion to dismiss your case, which lifts the automatic stay and exposes you to creditor collection
You can request a plan modification if your income has decreased or expenses have increased
You can convert to Chapter 7 if you can no longer afford any plan payment
Hardship discharge: In rare cases, if you have paid most of the plan and the failure was beyond your control, the court may grant a hardship discharge
Communication is key: Contact the trustee and your attorney immediately if you are having trouble making payments

Frequently Asked Questions

How much are Chapter 13 payments in Phoenix?

Payments vary based on your income, expenses, and debts. There is no fixed amount. The means test determines your disposable income. Arizona median income for one person is $56,381 -- if below this, your plan can be 3 years; above, it must be 5 years.

When is my first Chapter 13 payment due?

Your first payment must be made within 30 days of filing. Payments are typically monthly via wage deduction or direct payment to the Chapter 13 trustee.

Can my Chapter 13 payments change?

Yes. You can file a plan modification if your financial situation changes -- income increase or decrease, new expenses, or changes in debt. The court must approve modifications.

What happens if I miss a Chapter 13 payment?

The trustee may move to dismiss your case. Contact your attorney immediately. You may be able to modify the plan, catch up on payments, or convert to Chapter 7. The District of Arizona expects prompt communication.

Do I make my mortgage payment through the plan or directly?

Practices vary. Some plans include the regular mortgage payment; others only include arrears while you pay the mortgage directly. The trustee in the District of Arizona will specify how payments are structured.

What percentage of my debt will I actually pay?

Priority debts and secured debts are paid in full. Unsecured creditors receive whatever your disposable income allows -- often 10-30% of the total, sometimes less. The remainder is discharged at plan completion.