Completing the Chapter 13 Calculation of Your Disposable Income Form

On Chapter 13 Calculation of Your Disposable Income (Form 122C-2), you calculate the monthly amount you'll pay your nonpriority unsecured creditors over your five-year repayment plan.

When you file for Chapter 13 bankruptcy, you must fill out forms that tell the court about your income, expenses, assets, debts, and prior transactions. Two of the forms—Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period (Form 122C-1) and Chapter 13 Calculation of Your Disposable Income (Form 122C-2)—determine the monthly amount you’ll pay to your nonpriority, unsecured creditors, if anything, and the length of your Chapter 13 repayment plan. While you must fill out Form 122C-1, you’ll only fill out Form 122C-2 if your family income exceeds your state’s median income for a household of the same size. Completing Form 122C-2 will tell you how much you’ll need to pay your nonpriority unsecured creditors each month over your five-year repayment period.

Calculate Your Allowable Deductions and Expenses

When you make more than your state’s median income, you must fill out Form 122C-2 and calculate how much your nonpriority unsecured creditors—such as credit card debt, medical bills, and personal loans—will receive through your repayment plan. Called your “disposable income,” it’s the amount left over after you pay your monthly living expenses.  

While your disposable income is not calculated using all of your actual expenses, you can use some of them. For most of your expenses, such as housing, utility, and food costs, you must use predetermined amounts based on local and national standards. For example, if your monthly rent payment is significantly higher than the average rent in your area, you will not be able to take advantage of your higher payment to reduce your disposable income on Form 122C-2. In fact, you might have to tighten your budget in order to successfully complete a Chapter 13 plan. You can find the most up-to-date allowable deduction figures on the website of the U.S. Trustee.

Filling Out the Form

The form includes easy-to-understand instructions that will prompt you to list either a standard deduction or your actual expense. Here are some actual expenses you might be able to deduct:

  • income taxes
  • uniform fees and union dues, if mandatory
  • your mortgage and car loan payments
  • health, disability, and term life insurance payments
  • court-ordered payments such as alimony and child support
  • 401(k) or other retirement account loan payments
  • required contributions to qualified retirement accounts, and
  • childcare expenses.

Determine Your Monthly Disposable Income

To arrive at your monthly disposable income, you’ll deduct all allowable expenses and adjustments from your income. If your disposable income is negative, the bankruptcy trustee will not have much room to argue that you should be paying a significant amount to your unsecured creditors.

However, if you have a positive monthly disposable income figure, the trustee will multiply it by 60 months (because above-median debtors must be in a five-year repayment plan) and argue that you must pay your unsecured creditors at least an amount equal to that in your Chapter 13 plan.

(For more articles on filing for bankruptcy and completing the forms, see our Bankruptcy Forms topic area.)

This article provides general information only. When filing for bankruptcy, you must understand the federal and state laws governing the entire bankruptcy process. Failing to adequately research and understand how these laws might affect your case could result in unexpected consequences. If you aren’t familiar with the process, it's best to consult with an experienced bankruptcy attorney, or, use a do-it-yourself book like Nolo's  How to File for Chapter 7 Bankruptcy.

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