Allowable living expenses in a Chapter 13 bankruptcy are the costs the court subtracts from your income to figure out how much you can afford to pay creditors each month. What’s left after those deductions is your disposable income, and that number sets the floor for your plan payment over the next three to five years. Whether the court uses government-set figures or your actual household bills comes down to one question: how your income compares to the median in your state.
Which Rules Apply to You
Before any expense gets counted, your income is run through the means test. Bankruptcy law looks at your current monthly income, which is the average of all your income sources over the six full calendar months before filing. Multiply that by twelve and compare it to the median family income for a household your size in your state. The U.S. Trustee Program publishes updated median figures a few times a year.
If your annualized income is below the median, the court uses a flexible “reasonably necessary” standard. You and the trustee work from your actual household budget, and the judge decides what’s reasonable. Your plan runs three years.
If your income is at or above the median, you must complete Form 122C-2 and calculate most of your expenses using standardized figures from the IRS and U.S. Trustee Program instead of your real spending. Your plan runs five years.1Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan2United States Courts. Chapter 13 Bankruptcy Basics Most of what follows describes those standardized figures, because they create the framework above-median debtors live inside, and they’re also the benchmark trustees reach for when reviewing a below-median debtor’s budget.
National Standards: The Fixed-Figure Buckets
National Standards are flat monthly amounts that apply the same way everywhere in the country. They cover food, housekeeping supplies, clothing, personal care products, and a miscellaneous category. The figures come from Bureau of Labor Statistics consumer spending data and vary only by household size. You don’t need receipts to claim them; above-median filers get the full standard whether or not they actually spend that much.3U.S. Department of Justice. Means Testing – November 2025
For cases filed under the IRS data effective through early 2026, the combined monthly allowance is $839 for one person, $1,481 for two, $1,753 for three, and $2,129 for four, with $394 added for each additional household member.4Internal Revenue Service. Allowable Living Expenses National Standards The numbers update periodically, so verify the current amounts on the U.S. Trustee Program website before you file.
Out-of-pocket health care has its own National Standard: $84 per month for each household member under 65, and $149 per month for anyone 65 or older. This covers prescriptions, co-pays, and medical supplies. It sits on top of what you pay for health insurance, which is deducted separately as an actual cost.5Internal Revenue Service. Allowable Living Expenses Health Care Standards
Local Standards: Housing and Transportation
Housing and Utilities
Housing allowances vary by county and household size. The U.S. Trustee Program publishes a table for every county using Census Bureau and Bureau of Labor Statistics data. The standard covers rent or mortgage, property taxes, insurance, maintenance, gas, electric, water, garbage, phone, internet, and cable.3U.S. Department of Justice. Means Testing – November 2025
The published figure is a ceiling, not a floor. Above-median filers claim their county standard on Form 122C-2, but if your actual housing cost is well below the local number, the trustee may push to use the lower actual amount. If your costs run higher than the standard, the overage generally isn’t deductible unless you can show special circumstances.
Transportation
Transportation splits into operating costs and ownership costs. Operating costs cover fuel, insurance, maintenance, registration, parking, and tolls. The monthly allowance varies by Census region and metro area, currently running from about $219 in Anchorage up to $401 in New York City.6Internal Revenue Service. Allowable Transportation Expenses
Ownership costs are a separate nationwide allowance for a car loan or lease: $662 per month for one vehicle and $1,324 for two. The ownership allowance is only available if you actually have a loan or lease payment. A debtor who owns a car outright gets the operating deduction but not the ownership deduction. For both components, the deduction is capped at the lesser of the standard or what you actually pay. Allowances cover up to two vehicles, and a single filer with no dependents is typically limited to one.3U.S. Department of Justice. Means Testing – November 2025
Expenses You Claim at Actual Cost
Not everything fits a preset bucket. Form 122C-2 lists several categories where above-median debtors deduct their real, documented spending. These are the lines where your bills matter and the trustee will want proof.7United States Courts. Official Form 122C-2 – Chapter 13 Calculation of Your Disposable Income
- Federal, state, and local income taxes, Social Security, and Medicare. If you usually get a refund, divide the expected refund by twelve and subtract it from your monthly withholding.
- Mandatory payroll deductions such as required retirement contributions, union dues, and uniform costs.
- Health insurance premiums for you and your dependents, separate from the out-of-pocket health care standard.
- Court-ordered child support, spousal support, or similar payments. Past-due support is handled separately as a priority debt in the plan.
- Childcare: daycare, babysitting, preschool. Elementary and secondary school tuition does not count here.
- Education that is required by your employer or is needed for a disabled dependent child without public alternatives.
- Term life insurance premiums you pay for your own policy, or a joint-filing spouse’s policy.
- Medical expenses above the out-of-pocket health care standard, limited to the amount that exceeds the standard and isn’t reimbursed by insurance.
Each of these needs documentation. Expect requests for pay stubs, insurance statements, receipts, or court orders.
Arguing for More Than the Standard Allows
The IRS numbers are not the last word. If your actual necessary expenses exceed the allowed figures, you can argue for a higher deduction by showing “special circumstances” that leave you no reasonable alternative. The statute names two examples: a serious medical condition and a call or order to active military duty. Those aren’t the only qualifying situations, but they signal how high the bar sits. Routine budget overruns don’t clear it.8Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion
To raise the argument, you have to itemize each additional expense, document the cost, and submit a sworn written explanation of why it is necessary and unavoidable. Judges scrutinize these claims closely, and unsupported requests are denied.
From Expenses to Your Monthly Plan Payment
Once your allowable expenses are totaled, the math is simple. Current monthly income minus total allowable expenses equals your monthly disposable income, which becomes the minimum you pay into the plan each month for the length of your commitment period.1Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
Two more tests can push the payment higher. First, unsecured creditors must receive at least as much through your plan as they would have gotten if your nonexempt assets had been liquidated in a Chapter 7. Second, priority debts such as recent income taxes and past-due child or spousal support must be paid in full over the life of the plan.9Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
Then there’s the trustee’s fee. The Chapter 13 trustee who distributes your payments takes a percentage of every dollar flowing through the plan, up to a statutory maximum of 10 percent, with the actual rate varying by district and fiscal year.10Office of the Law Revision Counsel. 28 USC 586 – Duties; Supervision by Attorney General Your monthly payment has to be large enough to cover that cut and still deliver what creditors are owed.
If Your Expenses Change During the Plan
A plan lasts three to five years, and household finances rarely hold still that long. If your expenses rise significantly after confirmation, you, the trustee, or an unsecured creditor can ask the court to modify the plan. A modification can raise or lower payments, extend or shorten the schedule, or build in a new health insurance cost. The modified plan still has to meet all the original requirements, and the total duration cannot stretch past five years from your first payment.11Office of the Law Revision Counsel. 11 USC 1329 – Modification of Plan After Confirmation
If things fall apart to the point that no realistic modification would let you finish, a hardship discharge may be available. The court can discharge your remaining nonpriority unsecured debts if the failure to complete payments is due to circumstances beyond your control, unsecured creditors have already received at least what they would have in a Chapter 7, and further modification isn’t workable. Priority obligations like tax debts and support arrears survive a hardship discharge.12Office of the Law Revision Counsel. 11 USC 1328 – Discharge
Don’t Inflate the Numbers
Overstating what you spend or inventing costs you don’t have is bankruptcy fraud. A false oath or false statement in a bankruptcy case is a federal crime carrying up to five years in prison, a fine, or both.13Office of the Law Revision Counsel. 18 USC 152 – Concealment of Assets; False Oaths and Claims; Bribery Short of prosecution, misrepresenting your budget can get the case dismissed, your discharge denied, or both. Trustees cross-check claimed expenses against bank statements, pay stubs, and tax returns, so inflated numbers tend to surface, and when they do the debt situation ends up worse than before filing.