When a Chattanooga resident files for Chapter 13 bankruptcy they will be expected to use some of their income to pay off their debts over time through the execution of a repayment plan. As such, a person must have some disposable income that they can dedicate to this purpose. Without disposable income, a person may not be able to fulfill their responsibilities under their unique repayment plan.
Disposable income is a specific term when it comes to Chapter 13 bankruptcy. According to information promulgated by the United States Bankruptcy Courts, “disposable income” is income that is left over after a person has covered the reasonable costs associated with their needs and the needs of their dependents as well as contributions to charities. A person does not have to factor in child support payments that they receive from an ex-spouse or partner when computing their gross income.
Therefore, in some cases a person may find that their disposable income is practically nonexistent. If a person lives paycheck to paycheck in order to pay all of their bills and to ensure that their kids have what they need, they may have very little discretionary money left over. These individuals’ financial needs may be better suited to Chapter 7 bankruptcy or another debt relief option available under the law.
There are many requirements that apply to individuals who wish to pursue Chapter 13 bankruptcy. It is helpful for those who are interested in learning more about the process to speak with legal professionals who work in the bankruptcy field. These individuals can advise their clients on what they will need to do in order to successfully overcome their debts.