How does the Plan of Reorganization work?
The plan must also meet two other tests: Best Interest of Creditors Test : the plan must give unsecured creditors at least as much on their claim as they would have received if the debtor filed Chapter 7 ; and Best Efforts Test : all projected disposable income (the amount left after payment of allowed expenses: see Trustee Guidelines and Census Bureau and IRS Data) must be paid into the plan for the “applicable commitment period” which could be 3 to 5 years (or maybe more). The plan must also provide for payment in full of priority claims and generally provide for payment of the value of secured claims on cars, etc., in full over the life of the plan. The Bankruptcy Reform Act changed the amount necessary to pay on vehicles that were purchased in the 2 1/2 years prior to filing, or other personal property purchased within the year prior to filing. See §1325(a)(10)-hanging paragraph which seems to mean that the full amount of the debt shall be paid for these two new exemptions. Debts s
Best Interest of Creditors Test : the plan must give unsecured creditors at least as much on their claim as they would have received if the debtor filed Chapter 7 ; and Best Efforts Test : all projected disposable income (the amount left after payment of allowed expenses: see Trustee Guidelines and Census Bureau and IRS Data) must be paid into the plan for the “applicable commitment period” which could be 3 to 5 years (or maybe more). The plan must also provide for payment in full of priority claims and generally provide for payment of the value of secured claims on cars, etc., in full over the life of the plan. The Bankruptcy Reform Act changed the amount necessary to pay on vehicles that were purchased in the 2 1/2 years prior to filing, or other personal property purchased within the year prior to filing. See 1325(a)(10)-hanging paragraph which seems to mean that the full amount of the debt shall be paid for these two new exemptions. Debts such as home mortgages, that exceed the len
