Living Expenses Allowed Under Chapter 13

Columbus GA Bankruptcy Attorneys

Individuals can file for bankruptcy under chapters 7 and 13. While chapter 7 is a liquidation bankruptcy, chapter 13 is a reorganization bankruptcy. Newly introduced reforms to the US Bankruptcy Code have made it more difficult for people to qualify for chapter 7 bankruptcy. This could be the reason why there is an increase in people filing for chapter 13 bankruptcy.

Chapter 13 bankruptcy is ideal for people who have a regular income but due to mismanagement of their finances find that they are neck deep in debt. Filing for chapter 13 bankruptcy gives them a new lease of life by allowing them to retain their assets and properties and at the same time repay their debts through a court supervised repayment plan over a period of time.

The court appointed trustee oversees payment towards debt and distributes this monthly to the creditors. Monthly payment has to be made towards debt repayment plan to the trustee. This monthly payment amount is decided by court based on income from all sources and monthly living expenses. Monthly living expenses would include housing, food and clothing, utilities etc. The court deems the allowable amount towards these.

Chapter 13 includes food clothing, personal care products, household supplies as living expenses and the allowed amount is based on the Internal Revenue Service’s National Standards and does not calculate individual needs. The allowable total expense for a family of four is stated to be $1,370 per month as of January 2010. But mind you, that housing and utility expense is figured on state and county amounts as well as family size and not on national standards. Thus local IRS standards taking into consideration changes in locations and regional differences allow $700 to several thousands per month towards housing and utilities.

Transportation expenses include car payments, bus passes, gas, parking expenses, car insurance etc. These are considered to be necessities of travel for employment. The amount allowed is calculated on local standards and therefore vary from state to state, metropolitan areas and counties. One car per individual filing is the transportation that is allowed by bankruptcy court.

There are certain other living expenses that are permissible under chapter 13 bankruptcy law. These are considered to be necessary for continued personal well being and financial health. The expenses include mandatory payroll deductions, taxes, court ordered payments, child care, life insurance, health care, educational expenses needed for employment, telecommunication services, expenses needed for a mentally or physically challenged child.

Bankruptcy law offers considerable protection for individuals filing for bankruptcy under chapter 13. Debtors can hire services of experienced bankruptcy attorneys to ensure that the filing is accurate and according to rules as well as guarantee that their rights would be well protected.

If you are searching for Columbus GA bankruptcy attorney or interested in Chapter 7 or Chapter 13 even need a Bankruptcy lawyer, then we can help.