tors future disposable income that is not necessary to support the debtor and any dependents. The plan lasts three to five years while the automatic stay remains in effect. Unsecured creditors must receive at least what they would under a hypothetical Chapter 7 liquidation, with "value" determined by court testimony as opposed to actual market sales.Although the intent of the law is to allow debtors to start over with a "clean slate", it also has the intent to make the creditors whole as far as possible under the circumstances. Chapter 13 of the Bankruptcy Code is structured for wages earners or small businesses. It enables debtors to immediately stop all debt collection activities, including wage attachments, mortgage foreclosures, lawsuits, telephone calls, letters, bank setoffs or any kind of collections activity at all. Although this collection activity is stayed, the individual or the attorney proposes a plan of repayment and the debtor begins pay on it. In most cases, the plan can propose payments in an amount that is less than 100 percent of the debts. Many debtors repay 10 percent, and some even pay less. The plan usually continues for three years, but it cannot last more than five years. When the court confirms the plan, it becomes binding on the creditors. After the debtor completes the payments under the plan, the court cancels the balance of the debt. Chapter 13 is often used to stop mortgage foreclosures and can save a person's home, even at the last moment. However, payments to mortgage creditors generally cannot be reduced or modified.Case LawThe two most important cases that I know of in bankruptcy law are known as Ron Pair and IN RE LAGUNA. Ron Pair established that the bankruptcy will allow the collection of "interest, regardless of whether the agreement giving rise to the claim provides for interest [United States v. Ron Pair Enterprises, Inc., 489 US 235, 241], until a plan's confirmation date. However, ...
