Chapter 13 Bankruptcy Plan: The Administrative Expenses Multiplier

Chapter 13 bankruptcy plan helps a debtor to keep the property with himself and pay back the debts as per the newly agreed payment schedule for a period of 3 to 5 years. Only individuals with sufficient disposable income can file for bankruptcy under this chapter. Whenever a debtor files for bankruptcy under Chapter 13, Statement of Current Monthly income and deductions have to be filed along with the bankruptcy filing.

Chapter 13 Bankruptcy - Process of Disposable Income Calculation

Form 22C is the form for Chapter 13 bankruptcy filers to state their current monthly income and expenditures. Except few data of sources and amount of debtor’s income, most of the other data for filling this form should be based on the data published by the Census Bureau and IRS Data. This form is mainly filled in to find out the available income and disposable income left with the debtor after the payment of the priority and secured debts. This idea of the disposable income is necessary to determine the period of repayment as 3 years or 5 years.

Administrative Expenses Multiplier

Before calculating the disposable income, certain deductions are allowed under the codes and standards of the Internal Revenue Service. It is calculated for various states by taking into account the basic living expenses, utilities expenses, transportation and rent expenses. Apart from these, certain special deductions for medical expenses are allowed for disabled or ill persons.

For chapter 13 bankruptcies filing, an additional deduction of administrative expenses is also allowed by the IRS standards. These required data can be found in the IRS websites. An administrative expenses multiplier is calculated for each and every state in the US by multiplying the product of projected monthly payments with this administrative expenses multiplier. This multiplier ranges from 5 percent to 10 percent in most of the states while exceptionally it is less than 5 percent in few states. For example, the multiplier is 10 percent for the district of Alaska, 5.5 percent for the district of Arkansas, 9.1 percent for the district of Hawaii and in eastern district of Michigan it is just 4.5 percent.

Getting Legal Help

Filing and Processing of Chapter 13 are governed and regulated by the state and federal laws of bankruptcy. Hence, it might be confusing and daunting to file it on your own. To make you work simpler, you can approach and get the help of a bankruptcy lawyer who could help you by providing necessary legal advice.