Repayment Criteria in Chapter 13 Bankruptcy
Repayment criteria comes into play when the amount debtor is expected to pay changes throughout your repayment period. Bankruptcy law assumes a reasonable lifestyle, not the debtor’s actual lifestyle. Most people must live frugally under a Chapter 13 plan. Debtors with income that is over the median income must complete a schedule of expenses (the Means Test), most of which are based on numbers (caps) from the Census Bureau and the IRS.
Additionally, current income and expenses are calculated on Income and Expense schedules. The debtor is required to repay to the allowed creditors an amount equal to the highest indication produced by the means test, the income/expense schedules, liquidation test, and various other factors that could increase the required repayment (the additional factors do not apply in your case). Both the means test and income/expense schedules indicate that you have more than enough excess income each month to repay a 100% dividend to your unsecured creditors. This would be the same even if the debtor did not work any additional jobs other than his or her one full-time job.
Although the debtor’s additional side jobs are not the driving force in your required repayment, the information is required to be included in your schedules. The United States Trustee’s position on income is that it includes, but is not limited to:
- Pay/shift differentials.
- Any and all income, whether or not taxable.
- Figures are gross amounts, before any deductions.
It is understood that the debtor’s disposable income is not static. The amount the debtor is expected to pay can change throughout your repayment period. For instance, if the debtor’s income increases but his or her expenses stay the same, his or her disposable income — and his or her plan payment — could increase (although this is not applicable in your case as you would be repaying a 100% dividend). The debtor has an obligation to report any increase in income to the bankruptcy trustee. Likewise, if the debtor’s income significantly dropped over an extended period of time and there was little likelihood of it increasing and/or the debtor’s allowed expenses significantly increased during the plan term, the debtor could petition the court to allow him or her to decrease his or her plan payments.
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