Expense Questions

[klux]

I'm helping my parents with paperwork for their bankruptcy (yet, trying to not let them find out about mine)

I'm wondering if these expenses sound pretty good, it is a family of 5. My parents, 3 kids (8-12-13 still at home).

Mortgage - 593
Heat & Electricity - 300
Cell Phone - 120
Cable, Internet, Phone - 150
Home Maintenace - 300 (this would be for their primary residence and a pretty beat up rental unil that needs a lot of upkeep)
Food - 850 and 150 for hot lunches at school, total 1000
Clothing - 250
Laundry/Drycleaning - 60
Medical - 650 (400 counciling and 250 prescriptions, they both are disabled and don't have good prescription coverage)
Transportation 850 (600 gas and 250 for vehicle upkeep, older truck with a lot of miles)
Recreation - 400
Charity - 10
Homeowners Insurance - 90 (includes insurance for rental property)
Health Insurance - 200 (that medicare part b or d or whatever)
Auto Insurance - 225
Property Taxes for both properties - 390
Vehicle - 292
2nd Mortgage - 195
Rental Property Mortgage - 324
Babysitting - 150
Kids Schooling/Sports - 250
Cigarettes - 200
Hair Cuts - 50
Kids Allowance - 120
Savings for Emergencies - 200
X-mas/Birthday Savings Club - 100

**Keep in mind that they receive adoption assistance and social security for the kids, so they do have to be able to report money going towards the kids, such as the sports and allowance by law***

[Help!]

Are they filing Ch. 7? Below median or above? Are these expenses for the means test or for current expenditures?

[klux]

They pass the means test, because social security isn't included. They want to do a chapter 7 if they can, but guess that depends on Schedule I & J, tha'ts my understanding, but that it'd be a 3 year plan. If these expense are ok, then there'd probably be no problem and they'd be able to do a chapter 7.

[Phillymanhere]

Have they (you) met with an attorney yet? When it gets to this level of specificity, it's probably best to rely on your attorney's advice.

Have you checked the IRS guidelines?

[klux]

Yes, we all meet with the attorney the other day. She said wouldn't know which chapter until after they paid her the retainer fee and turned in the papers. I've compared to IRS standards, but I don't see anywhere where it says anything about school fees, sports, allowances, anything like that.

[pa308]

I dont know whats acceptable for recreation.......My atty put down 200/mo and that has me stressing.

[Help!]

Assuming your parents are over the median, here's what the attorney for the UST who reviewed our means test would have said (not meant to imply that this is what will happen in your case... talk to your attorney):

Mortgage - 593 (OK)
Heat & Electricity - 300 (OK)
Cell Phone - 120 (Document and explain necessity)
Cable, Internet, Phone - 150 OK
Home Maintenace - 300 (this would be for their primary residence and a pretty beat up rental unil that needs a lot of upkeep) (Document and explain)
Food - 850 and 150 for hot lunches at school, total 1000 (Adjust to IRS Standards)
Clothing - 250 (Adjust to IRS Standards)
Laundry/Drycleaning - 60 (Receipts, detail calc.)
Medical - 650 (400 counciling and 250 prescriptions, they both are disabled and don't have good prescription coverage) (Document with receipts and detail calculation)
Transportation 850 (600 gas and 250 for vehicle upkeep, older truck with a lot of miles) (Document with receipts, detail calculation, explain necessity)
Recreation - 400 (Eliminate on means test, reduce on I & J)
Charity - 10 (Document with receipts)
Homeowners Insurance - 90 (includes insurance for rental property) (OK if primary residence only)
Health Insurance - 200 (that medicare part b or d or whatever) (Ok if equal to or below IRS Standards)
Auto Insurance - 225 (Document with receipts, detail calculation)
Property Taxes for both properties - 390 (OK if primary residence only)
Vehicle - 292 (OK)
2nd Mortgage - 195 (OK)
Rental Property Mortgage - 324 (Disallow on means test, primary residence only)
Babysitting - 150 (Disallow on means test if not necessary for employment; receipts, detail calculation)
Kids Schooling/Sports - 250 (Allow IRS Standard for tuition, document and explain necessity; Disallow sports on I & J as these should already be accounted for as "recreation")
Cigarettes - 200 (Disallow on means test, Schedules I & J)
Hair Cuts - 50 (OK)
Kids Allowance - 120 (Disallow)
Savings for Emergencies - 200 (Disallow)
X-mas/Birthday Savings Club - 100 (Disallow)

[Help!]

They pass the means test, because social security isn't included. They want to do a chapter 7 if they can, but guess that depends on Schedule I & J, tha'ts my understanding, but that it'd be a 3 year plan. If these expense are ok, then there'd probably be no problem and they'd be able to do a chapter 7.

If they are above the median income, a Ch. 13 plan would have to be 5 years unless 100% can be repaid in a shorter time period.

[laurannm]

Assuming your parents are over the median, here's what the attorney for the UST who reviewed our means test would have said (not meant to imply that this is what will happen in your case... talk to your attorney):

Mortgage - 593 (OK)
Heat & Electricity - 300 (OK)
Cell Phone - 120 (Document and explain necessity)
Cable, Internet, Phone - 150 OK
Home Maintenace - 300 (this would be for their primary residence and a pretty beat up rental unil that needs a lot of upkeep) (Document and explain)
Food - 850 and 150 for hot lunches at school, total 1000 (Adjust to IRS Standards)
Clothing - 250 (Adjust to IRS Standards)
Laundry/Drycleaning - 60 (Receipts, detail calc.)
Medical - 650 (400 counciling and 250 prescriptions, they both are disabled and don't have good prescription coverage) (Document with receipts and detail calculation)
Transportation 850 (600 gas and 250 for vehicle upkeep, older truck with a lot of miles) (Document with receipts, detail calculation, explain necessity)
Recreation - 400 (Eliminate on means test, reduce on I & J)
Charity - 10 (Document with receipts)
Homeowners Insurance - 90 (includes insurance for rental property) (OK if primary residence only)
Health Insurance - 200 (that medicare part b or d or whatever) (Ok if equal to or below IRS Standards)
Auto Insurance - 225 (Document with receipts, detail calculation)
Property Taxes for both properties - 390 (OK if primary residence only)
Vehicle - 292 (OK)
2nd Mortgage - 195 (OK)
Rental Property Mortgage - 324 (Disallow on means test, primary residence only)
Babysitting - 150 (Disallow on means test if not necessary for employment; receipts, detail calculation)
Kids Schooling/Sports - 250 (Allow IRS Standard for tuition, document and explain necessity; Disallow sports on I & J as these should already be accounted for as "recreation")
Cigarettes - 200 (Disallow on means test, Schedules I & J)
Hair Cuts - 50 (OK)
Kids Allowance - 120 (Disallow)
Savings for Emergencies - 200 (Disallow)
X-mas/Birthday Savings Club - 100 (Disallow)

This is pretty interesting.....so on the items where you note "Adjust to IRS Standards", are you saying that these expense categories were adjusted on your means test (meaning you entered expenses on your means that were higher than the IRS Standards)?

[Help!]

This is pretty interesting.....so on the items where you note "Adjust to IRS Standards", are you saying that these expense categories were adjusted on your means test (meaning you entered expenses on your means that were higher than the IRS Standards)?

Yes, unless it could be established that there was "no reasonable alternative" to exceeding the standard. In every motion to dismiss filed by this attorney, the presumption of abuse resulted from expense disallowance/reduction. In each case, a spreadsheet showing the debtor's # for each expense in one column and the UST's # in the other was filed as supporting documentation. The UST's column was all IRS Standards and the debtor would have to file an objection to the motion to dismiss to have the benefit of judicial discretion.

I am throwing this out there to show what the UST in our district has done - not meant to be a prediction of what other UST's would do.

[liz417]

Yes, unless it could be established that there was "no reasonable alternative" to exceeding the standard. In every motion to dismiss filed by this attorney, the presumption of abuse resulted from expense disallowance/reduction. In each case, a spreadsheet showing the debtor's # for each expense in one column and the UST's # in the other was filed as supporting documentation. The UST's column was all IRS Standards and the debtor would have to file an objection to the motion to dismiss to have the benefit of judicial discretion.

I am throwing this out there to show what the UST in our district has done - not meant to be a prediction of what other UST's would do.

Thanks for the info Help! It's good to know because I am over on a few of the standards and now I know that I *might* have to defend those...

[laurannm]

Yes, unless it could be established that there was "no reasonable alternative" to exceeding the standard. In every motion to dismiss filed by this attorney, the presumption of abuse resulted from expense disallowance/reduction. In each case, a spreadsheet showing the debtor's # for each expense in one column and the UST's # in the other was filed as supporting documentation. The UST's column was all IRS Standards and the debtor would have to file an objection to the motion to dismiss to have the benefit of judicial discretion.

I am throwing this out there to show what the UST in our district has done - not meant to be a prediction of what other UST's would do.

I wasn't even aware you were allowed to enter anything above IRS Standards on the means test, even if you could document the excess.

[klux]

Thanks for the info. They are way below on the means test for income, it doens't include social security. So according to the means test, they can file chapter 7. But schedule I & J show about $150 disposable income, will that force into a 13? Attorney said if you pass the means test, but have disposable income on schedules it's a 3 year plan. Including the adoption assistance and social security, they are over the median by around $8-10,000 for the year. DOES THE MEDIAN INCOME ONLY COUNT ON THE MEANS TEST, OR THE SCHEDULES TOO?

[klux]

One more thing, where do I find the IRS standard for tuition? All I find is $125/month for each child for private school, nothig about public.

[laurannm]

Thanks for the info. They are way below on the means test for income, it doens't include social security. So according to the means test, they can file chapter 7. But schedule I & J show about $150 disposable income, will that force into a 13? Attorney said if you pass the means test, but have disposable income on schedules it's a 3 year plan. Including the adoption assistance and social security, they are over the median by around $8-10,000 for the year. DOES THE MEDIAN INCOME ONLY COUNT ON THE MEANS TEST, OR THE SCHEDULES TOO?

Median income only comes into play on the Means test. Schedules I& J use your actual monthly expenses and income. Generally the recommendations on this board is to show $100 or less of disposable income on your schedules (it's more of an unwritten rule, but a good one to follow).

Check out this link...might list some expenses that you may have forgotten about

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html