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What is projected monthly income? How much must I pay in chapter 13?

Posted on Apr 26, 2009 in BAPCPA, Chapter 13

What is projected monthly income?  And why do we care?  It tells us your monthly payment in a chapter 13 case.

If you are a debtor in a chapter 13 case, you need to know the amount of your projected monthly income because that is the amount of money you have to pay to the chapter 13 trustee during your applicable commitment period.  

What’s an applicable commitment period?  That’s the time a debtor must remain in chapter 13 case – 3 years for someone who made less than the median income for the six months before banrkuptcy and 5 years for everyone else.

But what is projected monthly income?  We really don’t know because this term is not defined in the Bankruptcy Code.  We know that current monthly income is the average income you made from all sources during the six months prior to your bankruptcy case.  But we don’t know whether what you made before is what you are likely to earn in the future.  Nor do we know whether your present budget is going to be the same in the future.  You may have a new job.  Or you may be threatened with layoff or furlough.  And your expenses might change.  So current monthly income isn’t necessarily the same as projected monthly income.

We have 11 different judges in Illinois and another 6 judges in Wisconsin.  There is no uniformity yet among these judges.  So when we know the judge who will oversee your case, we will know how to calculate your responsibilities under a chapter 13 plan.  

And soon, we hope that the Seventh Circuit Court of Appeals, which oversees all federal courts in Illinois, Indiana and Wisconsin, will give us some clarity on how to deal with these issues in a case called In re Johnson. 

So keep up with Lakeblawg and we’ll keep up on the latest developments in chapter 13 cases for you.


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