How Much Is My Chapter 13 Payment Going To Be? Part 2: Median Income

Today I want to answer the question how much is my Chapter 13 payment going to be, and there’s another factor which is what’s your net disposable income. This is a tricky question to answer because your net disposable income is going to depend upon a lot of factors, the first of which is: Is your income above or below the median income for families of your size in your state? If the answer is “it’s below”, then it’s pretty simple. We take your income, we compare it to the expenses you are allowed to pay, and whatever that difference amount is, that’s your net disposable income. And we’re going to multiply that by 36 to 40 months, depending upon how long your case is going to be. At the end of that period, you’re going to get a discharge.
Now, if your income is above the median income for your state, it’s a different analysis. We’re going to use a hodgepodge of different standards: Your IRS local standards, there’s IRS national standards. If you have secured debt for your car, that’s going to get paid for dollar for dollar. We have secured debt for your house. That’s going to get paid dollar for dollar. And we’re going to consider all of these as part of what I call the “long form” to determine what your net disposable income is going to be if you are an above median debtor in your jurisdiction.
So, it’s a complicated answer, but basically, you’re going to have to pay at least your net disposable income for 60 months if you’re an above median debtor and your net disposable income based upon your actual income and expenses for 36 to 60 months. It’s your choice, depending upon if you’re a below median income debtor.