Tag: 1325(a)(4)

Form: Best Interests of the Creditors Calculator

11 U.S.C. § 1325(a)(4), often called the “Best Interests of the Creditors” or the “Liquidation” test, requires that:

the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;

As such, Chapter 13 Debtors must pay unsecured creditors at least as much as those creditors would get in a Chapter 7 liquidation. But it is important to keep in mind that a Chapter 7 liquidation is not without costs- the Chapter 7 Trustee will receive a strictly calculated commission pursuant to 11 U.S.C.… Read More

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