The court calculates your Chapter 13 payment based on your income, expenses, and debts

Your Chapter 13 payment is not a number you choose or negotiate. A bankruptcy trustee — a court officer assigned to your case — calculates it using a formula set by federal law. The formula starts with your monthly income, subtracts allowed living expenses, and uses what remains to pay your debts over three to five years. The court must approve this calculation before your repayment plan begins.

The payment amount depends on three things: how much money comes in each month, how much the law allows you to spend on necessities, and what you owe. If you earn more than the median income for your state and family size, you face stricter expense limits. If you earn less, you have more flexibility. Either way, the trustee's job is to find the maximum amount you can reasonably pay toward your debts each month.

Key Takeaways

  • Your Chapter 13 payment is calculated by the trustee using your gross monthly income minus allowed expenses, not by what you think you can afford.
  • The allowed expenses differ based on whether your income is above or below your state's median income for your family size.
  • You must report six months of recent pay stubs and tax returns so the trustee can verify your actual income.
  • The trustee files a proposed payment plan with the court, and you have the chance to object before the plan is confirmed.
  • Your payment covers priority debts first (taxes, child support), then unsecured debts like credit cards, with leftover funds going to secured debts like car loans.

Where the trustee gets your income number

The trustee starts by calculating your average monthly income over the six months before you file for bankruptcy. This is not your take-home pay — it is your gross income, meaning the money before taxes and other deductions. The trustee uses pay stubs, tax returns, and sometimes bank statements to verify this number.

If you are self-employed, own a business, or have irregular income, the trustee will average your earnings across those six months to smooth out months that were unusually high or low. If you receive child support, alimony, Social Security, or disability payments, those count as income too. Unemployment benefits and workers' compensation also count. The goal is to capture what you actually receive each month on average.

You will need to provide recent documentation: typically your last six months of pay stubs, your most recent tax return, and sometimes a profit-and-loss statement if you are self-employed. The trustee may also request bank statements to verify deposits. Bring these documents to your meeting with the trustee, called the 341 meeting, or provide them beforehand if the trustee requests them.

How allowed expenses reduce your payment

Once the trustee knows your income, they subtract the expenses the law allows you to have. These are not your actual expenses — they are standardized amounts set by the U.S. Trustee Program based on your location and family size. The law assumes you need money for housing, food, utilities, transportation, and other basics, and it protects that amount from going toward debt repayment.

If your income is below your state's median income for your family size, the trustee uses the IRS National Standards and Local Standards. These are tables that say, for example, a family of three in Ohio is allowed $1,800 per month for housing and utilities, or $400 for food, or $600 for transportation. You do not have to prove you actually spend that much — the law assumes you do.

If your income is above the median, the calculation is stricter. You still get the IRS and Local Standards, but you also have to account for actual expenses like car payments, insurance, and childcare that exceed the standard amounts. You will need to provide receipts or statements showing these higher expenses. The trustee will only allow the excess above the standard if you can document it.

The difference between above-median and below-median income

The median income threshold matters because it determines how much breathing room you get in your budget. The median is the midpoint — half of families in your state and family size earn more, half earn less. The U.S. Trustee Program publishes these numbers and updates them regularly; you can find your state's current median on the U.S. Trustee website.

Below-median filers have an advantage: the trustee uses standard expense tables and does not dig into whether you actually spend that much. If the standard says you need $400 for food, the trustee allows $400, even if you spend $300. The money left after income minus allowed expenses goes into your repayment plan, and your plan runs for three years.

Above-median filers face a longer plan and tighter scrutiny. Your plan runs for five years instead of three, giving you more time to pay. But the trustee will question expenses above the standard amounts and may deny them if you cannot document them. For example, if the standard for transportation is $600 but you have a car payment of $450 plus insurance of $200, you can show the trustee the loan documents and insurance bill to justify the higher amount.

How the trustee prioritizes which debts get paid

Your Chapter 13 payment does not go equally to all debts. The law sets a priority order, and the trustee pays debts in this order: first, the trustee's own fees; second, priority unsecured debts like recent income taxes and child support; third, secured debts like car loans and mortgages; fourth, general unsecured debts like credit cards and medical bills.

This matters because it affects how much of your debt actually gets paid. If your monthly payment is $500 and the trustee's fees and priority debts consume $450, only $50 goes toward credit cards. Over a five-year plan, that might pay off only a fraction of what you owe. At the end of the plan, the remaining credit card debt is discharged — forgiven — but you need to understand that going in.

Secured debts are different. If you have a car loan and you want to keep the car, the trustee must pay the full loan amount through your plan, or you must surrender the car. The same applies to a mortgage if you want to keep your home. The trustee cannot discharge a secured debt unless you give up the collateral.

What happens after the trustee calculates the payment

The trustee files a proposed repayment plan with the court within two weeks of your 341 meeting. This plan states your monthly payment amount, how long the plan runs (three or five years), and how much each creditor will receive. You receive a copy, and so do your creditors.

You then have the right to object to the plan if you believe the trustee made an error in calculating your income or expenses. Your creditors can also object if they think the payment is too low. The court holds a confirmation hearing where the judge reviews the plan and listens to any objections. If no one objects and the plan meets the legal requirements, the judge confirms it, and your plan becomes binding.

Once confirmed, you make your monthly payment to the trustee, not directly to creditors. The trustee distributes the money according to the plan. If your circumstances change — you lose a job, get a raise, or have a major expense — you can ask the court to modify the plan, but the trustee's original calculation is what starts the process.

Common reasons the trustee adjusts the initial calculation

The trustee's first calculation is not always final. If you object to the payment amount or if creditors object, the trustee may recalculate. Common reasons for adjustment include: you provided incomplete income documentation and the trustee now has the full picture; you claimed an expense that the trustee denied; or you and the trustee negotiated a different plan structure.

You might also request a modification after the plan is confirmed if your income drops significantly or if you have a new major expense. For example, if you lose your job, you can ask the court to lower your payment. If you get a raise, creditors might ask the court to raise it. These modifications go through the same court process as the original confirmation.

Some filers also negotiate with the trustee before the plan is filed. If you believe the trustee's calculation is wrong, you can meet with them, bring documentation, and discuss it. The trustee is not your advocate, but they are bound by the law, and if you can show them an error, they may adjust the proposed plan before it goes to court.

Frequently Asked Questions

What if I have no income or very low income?

If your income is below your allowed expenses, your Chapter 13 plan might require you to pay only $0 per month, or a very small amount. You still must file a plan and have it confirmed by the court. The plan typically runs for five years, and at the end, remaining unsecured debts are discharged. You must still make any required payments on secured debts like car loans if you want to keep the collateral.

Does the trustee count my spouse's income if we file together?

Yes, if you file a joint petition, the trustee adds both spouses' incomes and calculates allowed expenses for the household. If you file alone, only your income counts. This can make a significant difference in the payment amount, so discuss with your bankruptcy attorney whether filing jointly or separately makes sense for your situation.

Can I lower my payment by hiding income or lying about expenses?

No, and doing so is fraud. The trustee verifies income with tax returns and pay stubs, and the court can dismiss your case or deny your discharge if you misrepresent your finances. Be honest with your attorney and the trustee about what you earn and what you spend.

What if my income changes after the plan is confirmed?

You can ask the court to modify your plan if your income drops by more than a certain amount, usually 10 percent or more. If your income rises, creditors can ask the court to increase your payment. Modifications require filing a motion and sometimes a hearing, so talk to your bankruptcy attorney if your situation changes significantly.

How much of my debt will actually be paid through the plan?

That depends on your payment amount and the priority of your debts. If your payment covers priority debts and secured debts in full, the remainder goes to unsecured debts like credit cards. Whatever is not paid during the plan is discharged at the end. Ask your bankruptcy attorney to estimate what percentage of each type of debt will be paid based on the trustee's calculation.