If you file for Chapter 13 bankruptcy and reach an approved petition and repayment plan, it’s guaranteed that you must use all of your disposable monthly income to meet your monthly debt repayment requirements. Before you file your petition, however, there are approved ways to lower your monthly requirements by lowering the amount categorized as disposable income. Working with a bankruptcy attorney during this time is important to ensure your safety against accidental fraud associated with transferring incomes. Behm Law Group LTD. provides the legal advice and assistance you need throughout the process of filing for Chapter 13 bankruptcy in Redwood Falls, MN
One way to decrease your monthly payments by lowering your disposable income is by dedicating some of that income to charitable donations.
In order to reduce your disposable income with charitable donations, your donation expenses have to meet certain standards set by the US Bankruptcy Courts. First, the charity of your choice must be qualified under the tax code as a legitimate, government-approved religious or charitable organization. You can also donate to the government for public use of your funds, to your church, or to tax-exempt 501(c)(3) charities. Second, the donations must come from your own disposable income and not through other means under your control, such as your business or trust fund. Additionally, the donation must be monetary and the organization can’t be politically involved in legislative affairs or candidacies.
You may deduct up to 15% of your gross annual income for charitable donations to reduce the disposable income and lower monthly payment requirements in a Chapter 13 repayment plan. Any amounts over that 15% donated prior to filing for Chapter 13 bankruptcy can be considered as breaking the fraudulent transfer law. This means that your bankruptcy trustee can take back the amount over 15% from the charity you chose for those donations. You will also have to prove you’ve been making regular donations to an approved charity to have the full amount of your expenses deducted from your disposable income.
In the months leading up to your petitioning for Chapter 13 bankruptcy in Redwood Falls, MN, you can do a lot to optimize your repayment plan. With our bankruptcy attorneys advising you along the way, you can keep your petition legitimate as well as getting the most out of what Chapter 13 bankruptcy has to offer. For more information, contact Behm Law Group LTD. at (507) 387-7200.