Ninth Circuit Says Above Median Income Chapter 13 Bankruptcy Filers Must Have Five Year Plan
If your income is greater than the median income in your state and you file for Chapter 13 bankruptcy, your Chapter 13 repayment plan must last for 60 months. There are a few exceptions. For example, if you can pay your unsecured creditors in full before 60 months, then you can end the plan early (this does not apply to most filers). And in some courts, if your disposable income is zero, meaning after subtracting your allowed expenses from your income you have nothing left to pay unsecured creditors, you can propose a plan that is less than 60 months. Other courts won't allow you to do this.
The Ninth Circuit Court of Appeals recently overruled itself and decided that over-income Chapter 13 bankruptcy filers must propose a plan that lasts 60 months (unless the filer can pay off all unsecured debts before then). See In re Flores, No. 11-55452 (9th Cir. Aug. 29, 2013). (Previously, the Ninth Circuit said you could propose a plan less than 60 months.)
The Ninth Circuit joins the Sixth, Eighth, and Eleventh Circuits in its ruling on this issue, along with other bankruptcy courts around the country.
To learn more, see Ninth Circuit Sticks It to Higher Income Chapter 13 Debtors.