The debtor’s plan must be proposed in good faith. If a creditor objects to confirmation on the ground that the debtor has acted in bad faith, an evidentiary hearing may be required. Several factors are considered to evaluate the good faith requirements, such as the amount of the proposed payments, the debtor’s ability to earn and likelihood of future increase in income, the extent of preferential treatment of unsecured creditors, the extent of modification of the secured debts, debtor’s past bankruptcy filings, circumstances surrounding the accumulation of the debtor’s debts, etc.

A plan is not proposed in good faith if only nominal payments are proposed, or if the proposed payments do not represent the debtor’s reasonable best effort considering income and essential expenses. It is also not in good faith to propose a plan payment which is beyond the debtor’s ability to pay.

See also: