Chapter 13 Files - Payments and "Disposable Income"
As a starting point in Chapter 13 files, TITLE 11, U.S.C., Section 1325 describes how plan confirmations works. The operable part of this section provides that all disposable income must be paid to the trustee for disbursement for the benefits of creditors, and further allows trustees to deduct a fee for personal services provided before disbursement. The second portion of this section goes on to establish a test for confirmation in multiple parts, including the means testing requirement, the distribution test, and the duration of plans.
All disposable income must be turned over in Chapter 13 files. As a term of art, the calculation of payments in Chapter files requires conformity with local practices and customs adopted by the Court as well as strict provisions provided within the Code. The local practices are sometimes referred to as "bright line tests" because all debtors, as a condition of confirmation, must receive approval from the sitting judge, who is required to sign an order of approval.
Practices for Chapter 13 files
The cost of living varies among Federal Districts. The list mandatory list of approved living expenses includes a cost of living adjustment for a few areas throughout the US. Because these adjustments are modest, at best, wide variations in living standards are common. For example, a debtor living in poor rural communities tend to realize a higher standard of living than debtors who reside in major metropolitan areas, simply because of the cost of food, clothing, and transportation.
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