Under Chapter 13, how much money will I have left?

Under the old rules, people who filed under Chapter 13 had to devote all of their disposable income -- what they had left after paying their actual living expenses -- to their repayment plan. The new law adds a wrinkle. Although Chapter 13 filers still have to hand over all of their disposable income, they have to calculate their disposable income using expense amounts dictated by the IRS -- not their actual expenses. That is.. if their income is higher than the median in their state.

These IRS expense amounts are often lower than actual expense. What's worse, these allowed expense amounts must be subtracted not from your actual earnings each month, but from your average income during the six months before you filed. This means that you may be required to pay a much larger amount of "disposable income" into your plan than you have to spare every month. Certainly, this stipulation will lead to more Chapter 13 failures.