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Impact of Married, Filing Individually

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  • Impact of Married, Filing Individually

    This forum has been great to gather information. I need to start planning now for my eventual bankruptcy filing in about 6 to 12 months.

    Background: I am married and will be filing INDIVIDUALLY. Wife is not included. Have 2 kids. Wife is a college student and doesn't work. One child goes to daycare and the other to kindergarten in a private school where I work at. I make $72,500 per year. We lease two vehicles, under my name. I use one for work and she uses the other one. Mortgage on house and live in Buffalo, Erie County, NY.

    Here are some of the things I'm trying to clear up. I have about 6 months to a year to fix any of these issues before filing. A lot of the questions I am trying to clear up have to do with me filing alone and how that will affect allowed expenses.

    -If I don't reaffirm the 2 car leases and try to ride through, will I still be able to use the lease payment amounts as transportation expense?
    -Will I be able to justify two cars needed even though wife doesn't work but goes to school and takes kids to school and back?
    -How will the daycare and private school be looked at? I work at the private school so I get a discount of 70%.
    -Spouse will be losing her coverage through medicare and will be coming onto my employer health plan. Will that expense be allowed even though she is not filing?
    -I pay my wife's credit card because she uses it for grocery shopping and we don't have any mixed accounts. Will this be an issue?
    -How will my tax refund play into the whole calculation for the means test? I expect to receive a refund of roughly 5k, which is what we receive every year.
    -Are estimated expenses ok? My current spending is not realistic long term. I will need to get a new roof (3 layers and leaking), new AC for next summer, change the plumbing due to leaks, and clogged waste pipes that need to be cleared 2x per year (i know, fun). Also have major dental work that I have been putting off that I would need to do.

    I know that I asked a lot of questions. If anyone has any insight on any of the questions, please help.



  • #2
    Originally posted by lasllani View Post
    -If I don't reaffirm the 2 car leases and try to ride through, will I still be able to use the lease payment amounts as transportation expense?
    You can't ride-through a lease because it's a contract. You either reject or assume a lease. If you reject the lease then I'm sure the lessor will want the vehicle.

    Originally posted by lasllani View Post
    -Will I be able to justify two cars needed even though wife doesn't work but goes to school and takes kids to school and back?
    Yes. You can claim any expense for the health, welfare and general safety of your entire family. That would easily include a car for your spouse. I had 4 cars on mine (me, spouse, stepson, mother), and although questioned, it was not a problem.

    Originally posted by lasllani View Post
    -How will the daycare and private school be looked at? I work at the private school so I get a discount of 70%.
    Suffice it to say that "it will be looked at." Justification is necessary but it doesn't appear as though your expenses will be found to be extraordinary. Again, it will be questioned but my superficial 2-second review of this expense is not an issue. Daycare and any other childcare is generally accepted with proof of expense. The same should be said for private school... unless you simply "can't" afford to send your children to private school.

    Originally posted by lasllani View Post
    -Spouse will be losing her coverage through medicare and will be coming onto my employer health plan. Will that expense be allowed even though she is not filing?
    Yes it is allowed. See my comment about expenses for the health and welfare of your dependents.

    Originally posted by lasllani View Post
    -I pay my wife's credit card because she uses it for grocery shopping and we don't have any mixed accounts. Will this be an issue?
    Yes. You will not be able to add this as an "expense". However, you will get a food, clothing and general allowance for your regular expenses. I would have her stop using a credit card for shopping since that builds a dependency on using money that isn't available.

    Originally posted by lasllani View Post
    -How will my tax refund play into the whole calculation for the means test? I expect to receive a refund of roughly 5k, which is what we receive every year.
    It will affect your means test significantly. Your attorney, and the Trustee, will take your average refund, divide it by 12 and add it back to your monthly income. This could mean that you have more disposable monthly income (DMI) than you may have thought. I'm pretty sure none of that amount is EIC (earned income credit) and would not qualify to be exempt.

    Originally posted by lasllani View Post
    -Are estimated expenses ok? My current spending is not realistic long term. I will need to get a new roof (3 layers and leaking), new AC for next summer, change the plumbing due to leaks, and clogged waste pipes that need to be cleared 2x per year (i know, fun). Also have major dental work that I have been putting off that I would need to do.
    If your are planning on a Chapter 13, you'll just have to work with your attorney to hep you fashion a budget. You'll have to assess whether the money to put into the house is worth it. You are simply going to need to defer some maintenance simply because you can't afford them. You could seek permission from the Chapter 13 Trustee to incur debt to fix some things but remember that you will be in a Chapter 13 and your budget may not account for many things. That's one of the "joys" of being in a Chapter 13 and life happens. When life happens, such as a sewage back requiring $$$$s to repair, a Chapter 13 isn't as flexible as you may want.

    My strategy may be to think about the upcoming repairs and speak about that (with actual estimations of cost) with the attorney with whom you interview. Sadly, a debtor doesn't enter a Chapter 13 in order to find ways to make room so that they can repair their home. It is usually because they want to save their home from foreclosure; known future repairs can be at odds with the Chapter 13 plan. I am not saying that you can't do these things inside a Chapter 13. Many Chapter 13 debtors ask permission from the Trustee to use tax refunds specifically for the things that you mention.

    I think that you'll work it out.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      OP, this is posted in the chapter 7 forum. Are you looking at 7 or 13? That affects some of these answers.

      Comment


      • #4
        Thanks for catching that Chrysalis. I need to pay more attention. I'm getting old and I think I should retire.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


        • #5
          Originally posted by justbroke View Post
          Thanks for catching that Chrysalis. I need to pay more attention. I'm getting old and I think I should retire.
          haha... NOPE!

          Comment


          • #6
            Thanks so much for taking the time to answer those questions. I will be filing Chapter 7. It would be great to know how that would affect those answers. Again, thank you.

            Comment


            • #7
              The #1 thing I'd encourage you to do is to get familiar with the means test calculator at legal consumer, if you haven't already done that. Do you know the median income for your state for a family of four -- and are you above or below it? If you are below it, you won't have to do the means test for a chapter 7. If you are above ~ that calculator will give you, line by line, the expenses that are allowed to factor into the means test to determine if you have disposable monthly income (DMI) left over each month to put into a chapter 13.

              The expense for two vehicles is no problem, regardless of whether your wife is working or not.

              Your childcare and daycare expenses are what they are ~ there's probably no changing that. The difference in how this will be looked at (or whether it will be questioned) is -- are you using those expenses to help try to qualify for a chapter 7 (on the means test)? If not -- if you are already below median and/or don't need to use them on the means test because you already qualify without them -- then they may just be a non-issue. Our attorney did not include a line for pet care, for example. Not because we don't have a dog to feed and take to the vet (we do), but because it just didn't need to factor in anywhere. Our situation already looked "bad" enough without the pet care. (edited to say: there's no pet care on the means test, that is something that "could" have been added on schedule J but didn't need to be)

              I think it's important for people to understand that on many line items, you just don't use your actual expenses. Take FOOD, for example. Our family of five was spending WAY more each month than the standard number "allowed" for food. It was not justifiable in the context of bk. When it comes down to the forms, there are standards set for many things, and that is what they use to calculate your numbers. There will be a certain amount that is deemed "normal" or "average" for home repairs etc and your attorney will let you know what those numbers are. You will also see many of them pre-loaded into the means test calculator when you put in your zip code. Keep in mind that is to be used as a tool to get a general idea and a feel for things. The real, solid numbers will come from your attorney and that is what will be used on your petition. A good attorney will know what sort of things your local trustee will get worked up about, and which things they won't care about or question at all.

              Comment

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