§1326 Payments

Summary

The person who filed for bankruptcy (the debtor) must start making the payments the plan says within 30 days after they file the plan or after the court opens the case, whichever happens first, unless the judge orders otherwise. Those payments go to the trustee unless the plan says some money will be paid directly to a lessor for leased personal property or directly to a creditor who is protected on personal property the debtor bought; any direct payments for amounts due after the case starts must be shown to the trustee with the amount and date and will lower what the debtor pays the trustee. Money sent to the trustee is held until the judge confirms or rejects the plan. If the plan is confirmed, the trustee pays out per the plan as soon as possible. If the plan is not confirmed, the trustee returns money not already paid out to creditors to the debtor after deducting any allowed administrative claims. The court can change payment amounts before confirmation after notice and a hearing. If the debtor keeps leased or purchased personal property, they must give the lessor or secured creditor proof of required insurance within 60 days of filing and keep showing proof while they have the property. Each time the trustee pays creditors under the plan, certain amounts must be paid first: unpaid claims under 507(a)(2); the percentage fee for a standing trustee under 28 U.S.C. 586(e)(1)(B) if one is serving; and any unpaid chapter 7 trustee pay from a prior converted or dismissed case, which must be paid monthly by spreading the amount over the plan’s remaining months. Those monthly payments can’t be more than the greater of $25 or (the plan’s monthly amount for unsecured nonpriority creditors × 5% ÷ the number of months in the plan). Except where the plan or confirmation order says otherwise, the trustee makes the payments to creditors. The unpaid chapter 7 trustee pay can be collected even if it was discharged in an earlier case, but only as allowed above.