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Disposable Income

“Disposable income” is income (other than child support payments received by the debtor) less amounts reasonably necessary for the maintenance or support of the debtor or dependents and less charitable contributions up to 15% of the debtor’s gross income.  The courts apply living standards specified under IRS National and Local standards to determine what is reasonable to pay for food, clothing, rent, housekeeping, and so forth in order to determine the amount available to pay debts for purposes of Chapter 13.  Whatever is left over from the net income after required payroll deductions and allowable expenses after applying the means test formula is disposable income for Chapter 13 purposes.   Social security benefits, payments to victims of war crimes or crimes against humanity, and payments to victims of terrorism (i.e., World Trade Center victims) are not counted while determining disposable income.

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