This post is part of our series dealing with Chapter 13 bankruptcy issues. If you've been following these posts you now know that Chapter 13 calls for debtors to enter into a repayment plan in order to pay down their debts over time. But how much will you actually have to pay into your plan? We'll address this issue in today's post. In order to calculate how much you'll have to contribute each month toward your plan you'll have to analyze your income and compare it to your state's median family income. Once you know how your income compares to the state average, you'll know how much you'll be required to pay each month. If your income exceeds your state's median family income you'll have to pay all of your disposable income into your repayment plan over a five-year time period. But here's the catch: if your income exceeds the state average your expenses will be determined by the IRS for purposes of figuring out your disposable income. Your actual expenses are will not be taken into account if you fall into this category; rather, the IRS will determine just how much you should be spending on everyday items and necessities. If, on the other hand, you make less than your state's median family income you can enter into a three-year plan to repay your debts. And here you can use your actual monthly expenses to determine your disposable income – not the IRS norm.
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