When you file for Chapter 13 bankruptcy, you must complete a series of forms and provide information about your income and expenses, your debts and property, and prior transactions. Two 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.
Form 122C-1 is similar to the bankruptcy means test you complete to qualify for Chapter 7 bankruptcy, although it serves a different purpose. This form calculates your income and determines whether the length of your repayment period will be three or five years. If your income is above your state’s median income, you’ll find out how much you’ll need to pay your unsecured creditors by completing Form 122C-2.
For more information on how your disposable income can affect your Chapter 13 bankruptcy plan payments, see our topic area on The Chapter 13 Repayment Plan.
On Form 122C-1, you must disclose your average monthly income received from all sources during the six-month period prior to filing your case (ending on the last day of the full calendar month preceding your filing date). For example, if you file your case in January, you would state your average monthly income from July through December.
The form includes easy-to-understand instructions and prompts you to disclose all types of income you might have received. But keep in mind that you don’t have to include your Social Security benefits or any payments received because you were a victim of a war crime, crime against humanity, or terrorism. Once you complete all income items, add them up to calculate your total average monthly income.
After calculating your total average monthly income, you must determine whether it is more or less than the median income in your state for a household the same size as your own. To find the current median income figure for each state, visit the website of the U.S. Trustee and select "Means Testing Information.”
If your income is below the state median, Form 122C-1 presumes that you have no disposable income and your repayment period will be three years. You won't complete Form 122C-2. When proposing a repayment plan, the court will determine your disposable income based on your current income and expenses on Schedules I and J. In most cases, you will pay little or nothing to your unsecured creditors.
If your income is above the median, you must complete Form 122C-2. You’ll be prompted to subtract certain allowable deductions from your income to calculate your disposable income. To learn more about calculating your monthly payment to your nonpriority, unsecured creditors, see Completing the Chapter 13 Calculation of Your Disposable Income (Form 122C-2).
(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.