In Chapter 13 bankruptcy, disposable monthly income (DMI) is the amount of money left over after subtracting certain allowable expenses from your monthly income. DMI is used to calculate the amount of money you will need to pay to your creditors each month through your Chapter 13 plan.
Calculating Disposable Monthly Income
To calculate your DMI, you will need to start with your gross monthly income. This includes all sources of income, such as wages, salary, bonuses, commissions, tips, unemployment benefits, social security, and child support.
From your gross monthly income, you will need to deduct certain allowable expenses. These expenses include:
- Secured debt payments (such as mortgage payments and car payments)
- Priority unsecured debt payments (such as child support and alimony)
- Reasonable living expenses (such as food, housing, utilities, and transportation)
The amount of your allowable expenses will vary depending on your individual circumstances. However, there are certain standards that the bankruptcy court will use to determine what is reasonable.
How Disposable Monthly Income Affects Your Chapter 13 Plan Payment
Your DMI will be used to calculate the amount of money you will need to pay to your creditors each month through your Chapter 13 plan. The bankruptcy court will multiply your DMI by a factor to determine your monthly plan payment. The factor that is used will vary depending on the length of your plan and the amount of your debt.
For example, if you have a 36-month plan and your DMI is $1,000, your monthly plan payment will be $360 ($1,000 x 36%).
It is important to note that your DMI can change over time. If your income increases or decreases, your DMI will also change. This could affect the amount of your monthly plan payment.