You can do everything you think is right, list every bill you pay, and still have a Chapter 13 trustee tell you that your plan does not commit enough disposable income. For many people in the Atlanta area, that first objection feels like the ground just shifted under their feet. The number the trustee wants often looks nothing like what your family can actually afford, at least based on your own budget.
This disconnect is not your imagination. The court does not look at your finances the way you do at your kitchen table. Chapter 13 uses a rigid formula for “disposable income” that relies on averages and standardized expense allowances, not just the real numbers in your checking account. When your plan payment does not match what that formula produces, trustees often object and cases can quickly move toward denial or dismissal.
At The Ballard Law Group, we guide people through Chapter 13 cases in Lawrenceville and across the Atlanta area every day. We spend a lot of time fixing disposable income calculations on Form 122C, because that is where these problems usually start. Our goal in this guide is to show you how the calculation actually works, why trustees object, and how a careful recalculation can often turn a shaky case into a confirmable plan.
Why Your Chapter 13 Payment Does Not Match Your Budget
Most of us use “disposable income” to mean “what is left after my bills are paid.” You look at your paycheck, subtract rent or mortgage, utilities, groceries, gas, and other essentials, then see what is left to pay toward debts. From that perspective, it feels obvious that your Chapter 13 payment should line up with that leftover number on your personal budget.
Chapter 13 does not start there. The law defines disposable income through a specific formula that starts with what it calls current monthly income, then subtracts certain allowed expenses, many of which come from IRS standards instead of your actual costs. That formula appears on Form 122C, which runs alongside your Schedules I and J. So you essentially have two pictures of your finances, your real world budget and the court’s formula based version.
Trustees in the Atlanta area review both pictures side by side. If your plan payment matches your household budget but is lower than what the Form 122C calculation says your disposable income should be, they will often object. That objection is not necessarily a judgment on your honesty. It usually means the numbers across those forms do not line up the way the Bankruptcy Code requires, and the trustee is flagging that mismatch for the judge.
We see this confusion all the time. Clients come to us frustrated because they “cannot make the trustee’s numbers work.” Once we separate their Schedule I and J budget from the means test calculation and walk through each piece, the differences start to make sense. It does not make the payment magically easy, but it does give us a clear path to correcting errors and adjusting the plan so it has a real chance of being confirmed.
How Disposable Income Calculation Actually Works In Chapter 13
To understand why your plan payment looks the way it does, you have to start with current monthly income, or CMI. CMI is not your last paycheck. It is the average of virtually all income you received in the six full calendar months before you file, divided by six. That can include regular wages, overtime, bonuses, commission, and most side income. If you file in July, the lookback usually runs from January 1 through June 30, even if your hours changed in June.
Form 122C-1 takes that six month total and divides it by six to get a monthly average. It then compares that number to the median income for a household of your size in Georgia. If you are below the median, you may be treated more flexibly, and your Schedules I and J carry more weight. If you are above the median, you are considered an above median debtor, and your disposable income is driven by a more rigid set of allowed deductions on Form 122C-2.
Form 122C-2 applies a stack of standard deductions and certain actual expenses to that average income figure. You subtract allowed taxes, mandatory payroll deductions, and then a series of expense amounts tied to IRS National and Local Standards. You may also deduct certain secured debts and priority debts, like mortgage arrears and past due child support, in specific ways. What you cannot do is simply plug in your real grocery bill or your actual rent if those exceed the standardized limits.
Here is a simple example. Say your six month gross income is 36,000 dollars, which gives a CMI of 6,000 dollars per month. The means test might allow 1,200 dollars for housing and utilities based on the local standard, but you actually pay 1,500 dollars in rent and utilities. It might allow 600 dollars for transportation ownership and operating costs, even if your real car costs are 800 dollars. From your perspective, you have 3,700 dollars left after paying your real rent and car costs. On Form 122C-2, the standardized numbers make it look like you have 4,100 dollars before other deductions, because the form uses the lower allowed expenses.
For above median debtors, the number at the bottom of Form 122C-2 is the key. That is the calculated monthly disposable income that trustees expect to see flowing to unsecured creditors over the life of your plan. When we prepare a Chapter 13 in the Atlanta area, we walk through these forms line by line with clients because expectations about payments must be built around this formula, not just around what the family budget feels like it can handle.
IRS Standards, Local Limits, and Why Your Actual Expenses May Not Count
One of the biggest shocks in this process is how often your actual expenses get replaced by standardized numbers. The means test uses IRS National Standards for some categories, like food, clothing, and other household items, and IRS Local Standards for housing, utilities, and transportation. These standards are set based on national and regional data, not on your particular lease or car note.
Take housing in the Atlanta area as an example. The IRS Local Standard might allow a certain amount for housing and utilities for a household of your size in the relevant county. If that standard is 1,200 dollars but your real rent and utilities add up to 1,500 dollars, the means test generally still only allows the 1,200 dollar deduction for that category. The extra 300 dollars that you really pay comes out of your pocket in real life, but the formula treats that 300 as available for creditors, which increases your calculated disposable income.
The same logic can apply to transportation. The Local Standards include an allowance for vehicle ownership and another for operating costs. If you have an older car with no loan but high repair and fuel costs, the form may still limit you to the standard operating expense amount. If you have a large car payment, the rules determine how much of that payment can be deducted and in what way. Filling in your exact gas receipts or mechanic bills is not how the form works, and that mismatch can surprise people who expected a more realistic budget approach.
Some categories do still use your actual costs. These can include taxes withheld from your pay, health insurance premiums, certain insurance costs, court ordered child support or alimony, and secured debt arrears that you are curing through the plan. Confusion often arises because the form mixes standardized amounts and actual amounts in a way that is not intuitive. If you treat all lines as actual expenses, you end up with a calculation that does not match what the trustee will compute.
At The Ballard Law Group, we work with the specific IRS local standards that apply in Lawrenceville and the greater Atlanta area. When we sit down with your rent, car payments, and utility bills, we are not just copying numbers. We are comparing them to the allowed standard amounts and planning around where the law will cap deductions. That local knowledge matters, because the trustees here expect Form 122C to match those standards, and they will question any numbers that do not line up.
Common Disposable Income Errors That Trigger Trustee Objections
Most disposable income problems that lead to trustee objections can be traced back to a few recurring errors. One of the most common is misreporting income. People sometimes list their net pay instead of gross on Form 122C, or they leave out overtime, bonuses, or side income that did show up in the six month lookback. When the trustee compares the form to your pay stubs and tax returns, the mismatch is obvious, and the trustee recalculates a higher CMI and higher disposable income.
Expense mistakes are just as frequent. A typical error is entering your actual rent or mortgage where only the local standard amount should be used, or claiming both the full IRS transportation allowance and your full car payment in a way that double counts. Another is including voluntary expenses, like helping an adult child with rent or paying extra on unsecured debts, as if they were mandatory. These may be very real commitments for your family, but they are not typically recognized as allowable means test deductions.
Timing also causes trouble. If you had a period of unusually high income, such as a seasonal bonus or heavy overtime earlier in the year, and you file before that spike falls out of the six month window, your CMI will be higher than what you currently bring home. Many people file right after a stretch of high hours because their debt feels unmanageable, but on paper, that timing can inflate disposable income so much that the trustee objects to a plan built on your current, lower income.
Trustees in the Atlanta area compare several documents at once. They look at your Form 122C, your Schedules I and J, your recent pay stubs, and your last tax return. If income on the means test is lower than the stubs show, or if expenses on Schedules I and J do not reasonably track with the standardized deductions on Form 122C, they view that as a red flag. That is when you see objections alleging that you have not committed all projected disposable income or that your plan is not proposed in good faith.
The impact of a single mistake can be large. For example, if you list a 500 dollar car payment as an additional expense when the form already allowed a standard ownership cost of 500 dollars, you may have effectively deducted 1,000 dollars for that one car. When the trustee corrects that to 500 dollars, your calculated disposable income goes up by 500 dollars per month, which over a 60 month plan is a 30,000 dollar swing. We focus on catching these issues before filing or, if necessary, amending the forms quickly to bring the numbers in line with what the trustee and the court will accept.
What Happens When The Trustee Thinks Your Disposable Income Is Wrong
After your Chapter 13 case is filed in the Northern District of Georgia, your trustee reviews the petition, schedules, Form 122C, and supporting documents. This review typically happens before your 341 meeting of creditors. If the trustee sees disposable income issues, they may raise questions at that meeting, ask for additional documentation, or flag concerns that will later show up as written objections to confirmation of your plan.
A disposable income objection usually says, in formal language, that your plan does not devote all projected disposable income to unsecured creditors for the required period. In plain terms, the trustee is telling the judge that the payment you proposed is too low compared to what the means test formula shows. The trustee might attach their own calculation or explain which lines they believe are wrong, such as income that is too low or expenses that are too high or not permitted.
If that objection is not resolved, the court can deny confirmation of your plan. In some situations, the judge will give you time to amend the plan and correct the numbers. In others, especially if problems persist or there are broader concerns about feasibility or good faith, the court can dismiss the case. A dismissal puts you back in front of your creditors, often with more pressure than before.
The critical point is that many of these objections are about math and documentation, not about moral judgments. Trustees have a duty to enforce the rules about disposable income, and they raise objections when the forms do not match those rules. When we step into a case with this kind of objection, we treat it as a problem to be solved. We go back through the means test, identify where our numbers differ from the trustee’s, and then decide whether to correct our forms, adjust the plan payment, or both, so that the judge can confirm a plan based on accurate, supportable figures.
We regularly attend 341 meetings and confirmation hearings for clients in Lawrenceville and the greater Atlanta area. We know the kinds of disposable income issues local trustees focus on and the explanations that tend to satisfy the court. That does not guarantee a particular outcome, but it means you are not walking into that process alone or guessing what the trustee will accept.
How We Recalculate Disposable Income To Save A Struggling Chapter 13 Case
When someone comes to us with a Chapter 13 case that is under pressure because of disposable income objections, our first step is to rebuild the numbers from the ground up. We gather at least six months of pay stubs, any records of overtime or bonuses, proof of side income, and recent tax returns. We then calculate the correct six month total and average for CMI, making sure that every type of income the Code requires is properly included and that we are not understating or overstating your earnings.
Next, we reconstruct the expense side, using the IRS National and Local Standards that apply in our part of Georgia and the categories where your actual costs are allowed. We review your rent or mortgage, utilities, transportation, insurance, support obligations, and secured debts. We look for places where the original means test used an actual number that should have been a standard, where a payment was counted twice, or where a voluntary expense was treated as mandatory.
Once we have a clean CMI and an accurate set of deductions, we compute what the corrected disposable income figure would be on Form 122C. In pre filing situations, we may also look at timing strategies, for example seeing whether waiting a month or two would shift an unusually high income month out of the six month window and lead to a more realistic average. In active cases, we use the corrected disposable income to decide whether we need to file amended forms, propose a modified plan, or both, and we prepare to explain those changes to the trustee.
Throughout this process, we keep the real world impact in view. It is not enough to technically satisfy the means test if the resulting payment is impossible for your household. We compare the corrected means test result to your Schedule J budget, see where there is tension, and talk frankly about what adjustments might be workable. Sometimes that means tightening some discretionary spending. Other times it means exploring whether Chapter 13 is still the right chapter or whether a different strategy makes more sense.
Because The Ballard Law Group uses flat rate fees and interest free payment plans, our clients are not watching a clock while we do this work. Rebuilding a disposable income calculation line by line takes time and attention. Our fee structure is designed so that you can get that level of review without worrying that every phone call or correction is adding to a growing hourly bill while your case is already under stress.
Planning Ahead: Getting Your Disposable Income Right Before You File
If you have not yet filed a Chapter 13 case, you are in a stronger position than you might think, because you can plan with the disposable income rules in mind instead of reacting to an objection later. One key concept is timing. If your income has been unusually high in the recent past due to overtime or a one time bonus, it can be worth looking at how long it will remain in the six month window. Filing after that spike has aged out can reduce your CMI and lower the disposable income the means test will show.
Good planning also means collecting and organizing documentation early. Gather six months of pay stubs, proof of any other income, and detailed information about your regular expenses and debts. Be candid about irregular income and about expenses that are more discretionary, such as voluntary support for others or nonessential subscriptions. We can then walk through which of those will matter on Form 122C and which will show up only on your Schedule J budget, so you are not surprised when certain costs are not fully recognized in the means test.
During an initial review, we can often give you a realistic range of what a Chapter 13 payment might look like under the formula, and we can also consider whether you may qualify for Chapter 7 instead. For some people in the Atlanta area, Chapter 7 is a better fit and avoids the multi year commitment of Chapter 13. For others, Chapter 13 remains the right path, but going in with clear numbers and realistic expectations makes it far more manageable.
Finally, planning ahead connects directly to your long term goals. A plan based on sound disposable income calculations is more likely to be confirmed, more likely to succeed over three to five years, and more likely to end in a discharge that truly cleans up your unsecured debts. That, in turn, puts you in a better position to take advantage of the credit score improvement resources we connect clients with after bankruptcy, so you are not just getting through the case but actually rebuilding your financial life.
Talk With A Lawrenceville Chapter 13 Attorney About Your Disposable Income
Disposable income calculations can feel abstract and punishing when you are already juggling bills and creditor calls. Underneath the stress, however, there is a set of rules and numbers that can be understood and, in many cases, corrected. When the forms reflect your situation accurately and follow the Code and IRS standards, trustees have far less room to object, and your plan stands a much better chance of being confirmed and completed.
At The Ballard Law Group, we focus on turning confusing disposable income issues into a clear plan of action for people in Lawrenceville and throughout the Atlanta area. Whether you are just starting to think about Chapter 13 or you already have a trustee objection on your case, we can review your income, expenses, and forms, explain where the numbers come from, and work with you on a strategy that fits both the law and your real life.
To schedule a stress free consultation, call us today.