How to Create a Chapter 13 Budget

Under U.S. federal law, a person who files for Chapter 13 bankruptcy agrees to pay off the accumulated debt over a three-to-five-year period. The debtor pays a third-party bankruptcy trustee, who then distributes the money to the creditors. The debtor is allowed to keep all assets, including a home, as long as the payments are made on time. If payments are missed, the bankruptcy period ends and the liquidation of assets may begin. Creating a budget for Chapter 13 bankruptcy is difficult and time-consuming and also requires reflecting honestly on how you spend your money. This type of budget can't consist of rounded-off figures; it must account for every penny of your income.

Gather all documents that report your average income for the past six months. If it is going to stay the same, great, you have a good estimate of the next six months' worth of income. But if not, you must adjust the plan to fit your new gross income.

Write a list of all of the goods and services that you regularly use. Do not omit anything, no matter how frivolous you feel it is. This budget must be realistic. You are more likely to stick to it if you record your allowances for things like cigarettes, shoes, and fast food and any other expenses that you don’t like to admit you have.

Take a look at your checkbook. If you pay all of your bills from it, you have a great source of your spending habits. Most people do not pay all of their bills from one account or even use one method of paying. If you use more than one source of funds, you must gather all credit card receipts and all cash receipts that you have.

Call local vendors of the goods and services that you consume. This step is especially important if you cannot find reliable up-to-date documentation of your spending history.

Calculate your budget by subtracting the expenses from your income. Hopefully you have enough to cover your basic living expenses. If not, you are going to have to make cuts in your budget wherever you can or find a way to generate more income. See resources below for a link to an online budget calculator.

Spend money only on the goods and services allowed for in your budget. Put any extra money you have into a savings account for future unforeseen expenses or for a future reward for following your budget for an allotted time period, such as a vacation after six months of scrimping.


  • If you omit things from your budget that you know you are going to spend money on, including things like entertainment, the budget will fail. Allow for moderate amounts of money to be spent on these activities to keep you sane. When you receive or spend money, save documentation of the transaction -- most importantly, pay stubs and receipts -- so that you know exactly where your money comes from and goes to.
    Signing up for flat-rate monthly bill plans for all services that offer it will give you an accurate number for those monthly expenses. Dana Wilkinson, a lawyer for the Bankruptcy Law Network, recommends putting money for things such as food or cosmetics onto a gift card to be used only at the store that sells things that you need.


  • A budget only works when it is followed.