Current filing, future insurance needs

[time4cake]

When completing the calculation of the means test I used actual expenses for health insurance, life insurance, home insurance, and auto insurance. However, post bankruptcy it will be necessary to rely on insurance in emergency situations rather than credit. My current health and home insurance both have large deductibles, my auto insurance is at the state required minimum, and seeing that the stress of bankruptcy may put me in an early grave I would like to increase my life insurance. Prior to bankruptcy I would have used credit to accommodate such unlikely emergencies, post bankruptcy I will not have that luxury. Is it reasonable to increase my insurance expense for the monthly expense abuse test or the means test based on these projections?

[SinkingFast]

You bring up a very good point. About insurance coverages.

But I think if you're filing soon, you're gonna have a problem summarily increasing coverages and/or costs for increased coverages that don't currently exist.

If you just up your expense allotment, it will look like you're padding if you have to show actual paperwork to the attny or Court.

If you change your coverages and then file a couple months later, it will look like you were prepping for filing BK.

I would suggest, if you want to make changes to your coverages, you should wait at least 6 months to file BK. The Court here is asking to look at 7 months of utilities bills, bank acct statements, pay stubs, etc.

Our health care, short term disability, dental, and vision are all deducted on Hubby's pay check stubs. We have our auto insurance premium bills and statements of coverage for the last how ever many years. All that documentation will show a continuation of same type coverage. Our attny and the Court will know we didn't make any significant changes to incur larger expenses for BK deductions.

So if you do make changes, be prepared to explain your self, have the extra costs denied by the Court, or wait to file so it doesn't appear you prepared for your BK by upping your allowable expenses.

[FoolAndHisMoney]

When completing the calculation of the means test I used actual expenses for health insurance, life insurance, home insurance, and auto insurance. However, post bankruptcy it will be necessary to rely on insurance in emergency situations rather than credit. My current health and home insurance both have large deductibles, my auto insurance is at the state required minimum, and seeing that the stress of bankruptcy may put me in an early grave I would like to increase my life insurance. Prior to bankruptcy I would have used credit to accommodate such unlikely emergencies, post bankruptcy I will not have that luxury. Is it reasonable to increase my insurance expense for the monthly expense abuse test or the means test based on these projections?

I know you are allowed to deduct heath & life insurance on the test, but I didn't know you could deduct actual auto & home insurance. You're allowed the IRS standards for car & housing expense no matter what the actuals are. It may be in line or maybe not, but either way they can't be actuals unless it's on schedule J.

[time4cake]

I know you are allowed to deduct heath & life insurance on the test, but I didn't know you could deduct actual auto & home insurance. You're allowed the IRS standards for car & housing expense no matter what the actuals are. It may be in line or maybe not, but either way they can't be actuals unless it's on schedule J.

You are allowed to deduct home insurance on the means test to the extent it is contractually required on your mortgage. The home insurance deduction would be shown in the Secured Debt section of the means test, but this is not my issue. I easily pass the Means Test, and I will likely pass the scrutinee of the Schedule J, but it is closer.

My understanding of Schedule J is that it is a projection of reasonably expected expenses. Line 19 of Schedule J states "Describe any increase or decrease in expenditures reasonably anticipated to occur within the year following the filing of this document:"

I am curious if anyone else made my argument in regards to projected insurance expense.

[SinkingFast]

Truthfully, it never occurred to me because,...........

We already carry very good coverage on autos. Much more than State required minimums. Probably part of the reason our auto ins is so high.

Same with Homeowners on the house and Renter's here. More than we actually needed, bare minimum.

We're well covered to begin with, so I wouldn't forsee more than "costs of business" types of increases.

[time4cake]

Just to answer my own previously started post:

My attorney had no trouble entering my anticipate insurance needs on my schedule J. He seemed to think it was perfectly reasonable to require additional insurance post bankruptcy.