determining your expenses in ch13 post oct17

[thrilch]

is it pretty much the same? I read here that they pretty much give you some leeway in determining what your monthly expenses are, and what you can pay back per month. for me, it looks to be a couple hundred or so. or are there new guidlines for what you are allowed to spend on what per month?

[AAAArt]

I believe that they are going to use the Govt./IRS schedules for your area.

[thrilch]

is it the same unrealistic and miserable schedule used now for ch.7

[StaciMM]

Depends on who you ask... Personally, I don't find it unrealistic or miserable. We are under in all areas. My only gripe is that there has been so much change in gas prices, so I'm hoping the transportation allowance gets adjusted big time when the new year starts.

Based on our family size & income, we're allowed about $1300/mo in living expenses, based on our area we're allowed about $1700 in housing/utilities and $258 car expenses. Our total expenses are about $3450, and those include a car payment & student loan payment ($420 total) so we've only used $3030 of the $3258 we're allowed.

There is alot of confusion about the IRS guidelines. I think most people should be able to fit within them. There are higher allowances in living expenses (groceries, clothes, etc.) for families with higher income, and some things are counted at actual (medical, insurance, child care, student loans, etc.) I do agree wholeheartedly that if someone is faced with BK, it is time to re-assess how the money is being spent. Most of the time, there are areas that can be cut back-and that is an important step to financial health after BK. (Learning to live within your means.)

is it the same unrealistic and miserable schedule used now for ch.7

[tater71]

"based on our area we're allowed about $1700 in housing/utilities and $258 car expenses."

how did you find out what is allowed in your area ??

[StaciMM]

Here is the link:

http://www.usdoj.gov/ust/bapcpa/meanstesting.htm

"Census Bureau Data" links to national income medians by state. (My guess is those #'s will shift for 2006, so anyone close now may be better off in 2 months.)

Part 1, "National Standards" under IRS Data breaks down allowable living expneses by income & family size.

Part 2, "Local Standards" part a is for housing & utilities expenses based on county & state, and Part 2 b is for transportation based on region of the country.

*Note for the housing & utility table: The 'non-mortgage' column is for utilities, and 'mortgage/rent' is just as it says. There has been a lot of confusion w/ people thinking that the 'non-mortgage' amount was the total allowed for people who rented. Example, Autauga County, AL would allow $407 utilities and $827 rent/mortgage for a family of 4+. My personal opinion is that a large family (7+) would be able to safely argue their point if their #'s were a little above the standard.

[StaciMM]

PS-

The facts that determine your maximum allowances are 1. where you live 2. household size and 3. gross income.

You can't claim the maximums if you actually spend less. I am allowed up to $1669 in rent/utilties but my actual # is about $1475. I can't bank the $194 remaining to use it somewhere else.

Regarding transportation, 'ownership costs' by the IRS guidelines are $475 1st vehicle and $338 2nd vehicle. The trustee may be able to question if you have a $600-700 car payment-I'm not sure. I'm not sure if this is only car payment, or if you can include car insurance in 'ownership costs'.

[thrilch]

so you are allowed the vehicle expenses PLUS the housing/utility standards PLUS the national standards? I also see there are a few other things allowed, on the main form.
this housing/utility standards - what is this? is this your mortgage/rent payments plus heat, gas, electricity? or is it just utilities? then your mortgage/rent is added onto the whole equation? because in my area it's only $1100 , but that doesnt seem like that's including rent/mortgage. Oh, maybe your add the rent/mort plus the non-mortgage, to get the total allowed, eh? if so, that kinda stinks.

[StaciMM]

You get both 'non mortgage' and 'mortgage/rent' so the total for your housing & utilities is the sum of those 2 #'s. If you're over in rent but under in utilities, I don't know if they look at the total, or at each broken down.

The 'non mortgage' is utilities so if, based on your county, state, and family size, you are allowed $350 'non mortgage' this would include your gas/heating cost, electric, water, sewer. I don't know if phone falls into that-of if it would be counted in the misc. part of living expenses.

The mortgage/rent is just as it sounds. (Don't know why they didn't just say utilities instead of non mortgage!)

The #'s are based on averages in the county/state that you live. If your house payment is significantly over what the standard is for your family size, you could have an issue.

Keep in mind these #'s are set by annual averages, and it is almost the end of the year. I would be surprised if the #'s were not adjusted in the next few months.

[thrilch]

The #'s are based on averages in the county/state that you live. If your house payment is significantly over what the standard is for your family size, you could have an issue.

Keep in mind these #'s are set by annual averages, and it is almost the end of the year. I would be surprised if the #'s were not adjusted in the next few months.

ok thanks for the response. what do you mean, i could have an issue if my mortgage is over what's allowable? it says on the form to subtract your mortgage from the allowable mortage/rent, but not to place a negative number there. so what are you supposed to do there? I will certainly wait for jan.1 like you say and see if they change it.

[StaciMM]

I haven't seen the form, and its certainly possible they will find less of a problem if you have a mortgage somewhat over the allowed 'rent/mortgage' than if you have a really high rent. (Just keep in mind that if your mortgage is very high for your area, you want to be sure you have a fair shot at managing the payment after BK-always look ahead!) And, if your mortgage makes up a large % of your take home pay, the trustee may be concerned with you trying to keep it. (Its not reasonable to say, pay $2000 mortgage when your take home is $3300.)

On the other hand, if you had $1800 rent and the max allowance was $1100, the trustee could very well say 'you don't need to rent such an expensive place, you should move to something more reasonable and that would free up $$ for a 13'.

[thrilch]

yes my mortgage is a little bit higher than what they allow (about $250 higher). I suppose they'd have to just let me do that. selling the house just because of that is absurd. this law is so new, I'm sure other people will have this question too.... but nobody really knows the answers yet.

[StaciMM]

Good points! There is a lot to be learned!

yes my mortgage is a little bit higher than what they allow (about $250 higher). I suppose they'd have to just let me do that. selling the house just because of that is absurd. this law is so new, I'm sure other people will have this question too.... but nobody really knows the answers yet.

[Lightning]

I would imagine that's exactly what they could make you do. The guidelines were created for a reason. People who make more money don't have the right to live in a nicer place while stiffing their creditors. There will probably be some leeway, but don't expect much. It might depend on your other expenses and how much you owe your creditors. $250 extra a month is quite a bit. I've seen the allowable housing expense list, and it looks very reasonable.

[StaciMM]

I agree that the IRS tables look reasonable from all I've seen. But, I also think that the cost of moving can be extensive.

Depending on what the 'norm' is, $250 may be alot, or it may be a little. For me, $250 is about 15% extra. There are only 3 counties in GA higher than where I live, and another 3-4 that are pretty close. So, in a different county, $250 could be a 40-50% overage. We looked at finding a less expensive rent this past spring-and decided in the end against it. The added cost & time involved in commuting a greater distance, and the quality that would have been lost in schools (not to mention the actual cost of moving) helped us to decide to stay where we are.