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The bias toward wage earner plans under the new Chapter 13 laws and
rules is unmistakable. Additionally, the redesign of approval standards
for confirmation increase payments, extend plan terms, and removes many
discretionary decisions once reserved for judges. The New Chapter 13
Bankruptcy Law Code focus upon the legal definition of disposable
income, which greatly simplifies the formula for calculation of net
available proceeds that must be tendered to the plan.
Payments Under New Chapter 13 Rules
The regenerated payment formula under the new Chapter 13 rules
dispenses with reasonableness as a condition of reviewing a debtor's
maximum monthly living expenses. The statutory limit is based on the
number of persons in a household, and provides a table of permissible
total expenses in all cases. The New Chapter 13 Law Living Allowance
presumes all people have identical needs, in all circumstances,
regardless of commuting distance to and from employment, family health
issues, and age or retirement status. Schedules do however make regional
distinctions for a few areas in which the average cost of living is
considered significantly above the national average. Total income, less
the federal living allowance, results in the disposable income measure
that must be paid into plans for the benefit of creditors.
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