In a Chapter 13 bankruptcy, you must use your income to pay some or all of what you owe to your creditors over time -- from three to five years. The repayment plan must show that all of your disposable income is being used to repay your debts. In determining disposable income, you may deduct certain expenses. These funds, then, are not used to repay your unsecured creditors through your plan. 

In 2005, Congress made clear that the Chapter 13 bankruptcy plan cannot alter the terms of repayment for a retirement plan loan. (11 U.S.C. 1322(f). This means that you continue to make payments on any retirement plan or pension fund loans during your bankruptcy. Your monthly payments will be deducted from your disposable income.

To learn more about disposable income and the Chapter 13 plan, see our Chapter 13 Repayment Plan area.