How to Calculate Disposable Income in Chapter 13
- 1). Get Form 22C. Official bankruptcy Form 22C is used to calculate disposable income in Chapter 13. The form is available online directly from the U.S. Courts website (see Resources below).
- 2). Report monthly income. The first part of Form 22C asks you to report your income and that of your spouse, if applicable. There is a single line for regular salary, wages, tips, bonuses and overtime, and separate lines for income from a business, rent, investments, retirement funds, unemployment and other sources. Each of these lines is subtotaled for you and your spouse on line 10, and you and your spouse's subtotals are combined on line 11.
- 3). Subtract a marital adjustment (if applicable). On line 13, you can deduct your spouse's monthly income if there is a reason for not including it towards your disposable income. Generally, this would occur if you are not filing a joint bankruptcy, though the U.S. Trustee's position is to oppose any marital deduction and try to include your spouse's income.
- 4). Enter relevant median income data. The U.S. Trustee uses Census Bureau data for median income of each state based on family size (see Resources below). From the drop-down menu on the Trustee's website, select your state. Enter the median income figure for your household size on line 16 of Form 22C. You household size includes you plus a spouse and any qualifying dependents (if applicable).
- 5). Calculate commitment period. A Chapter 13 repayment plan can last for either three years or five years depending on whether your annual income is less than or greater than the relevant median income from the previous step. To calculate your commitment period, multiply your monthly income from line 14 by 12. If this figure is less than line 16, your commitment period is three years. Otherwise it's five years.
- 6). Calculate deductions. The bulk of Form 22C is for calculating the deductions you can subtract from your monthly income. Deductions are not counted towards disposable income and are not applied to your debts. You can only apply deductions that actually apply to you, and only in the actual amount that applies, up to the limit. So, for example, you cannot take the car payment deduction if you don't have a car. If you do, you can only take the actual amount of your payment or the maximum limit, whichever is less.
- 7). Calculate disposable income. Your disposable income is your gross income (line 20) less your deductions (line 52). The total amount you will be expected to pay in Chapter 13 is your disposable income multiplied by your commitment period (either three or five) multiplied by 12.