Please critique my Schedule J

[flashoflight]

It’s interesting to see some people say things like kids activities are totally ok and then others say highly suspect. It seems like you really don’t know what you’re going to get in the end sometimes!

There is a spot for entertainment/recreation in schedule J and there is only so much the trustee will tolerate there. In addition, there is no place for entertainment/recreation in the means test except maybe special circumstances. I rather see home maintenance and pets there than recreation.

[clb24ecb1]

There is a spot for entertainment/recreation in schedule J and there is only so much the trustee will tolerate there. In addition, there is no place for entertainment/recreation in the means test except maybe special circumstances. I rather see home maintenance and pets there than recreation.

Ok so knowing this, why is it such a secret to know the “right” amount? Like if entertainment expenses aren’t allowed, or only certain expenses but not kid sports, or whatever, why isn’t that stated?

it’s frustrating because if there’s some secret formula to the schedule J I would think that it would be beneficial for people to know. It will be frustrating to be under the median, provide a thorough schedule J and then be knocked down because of little league or community theatre for the kids when I could have thrown more money into the “car maintenance” and have been discharged without question.

[clb24ecb1]

Ok so knowing this, why is it such a secret to know the “right” amount? Like if entertainment expenses aren’t allowed, or only certain expenses but not kid sports, or whatever, why isn’t that stated?

it’s frustrating because if there’s some secret formula to the schedule J I would think that it would be beneficial for people to know. It will be frustrating to be under the median, provide a thorough schedule J and then be knocked down because of little league or community theatre for the kids when I could have thrown more money into the “car maintenance” and have been discharged without question.

And my dog is a jerk, if theyre going to nickel and dime him they can have him 🤣

It’s frustrating because Schedule J is supposed to be representative of what your budget will look like after BK. Those pet costs are there and will continue to be there unless they make me get rid of the animals 🤷🏼♀️

And no Little League, but extra car maintenance ok? Fine, I’ll dump extra in car stuff and then after discharge use that extra for little league anyways. Or eat cheap for a week to afford the fees.

[justbroke]

It’s frustrating because Schedule J is supposed to be representative of what your budget will look like after BK. Those pet costs are there and will continue to be there unless they make me get rid of the animals 🤷🏼♀️

I know the frustration and it's also frustrating for the judges. I read one opinion where the judge said that although the debtor's girlfriend (significant other) and her children all lived with him for years, that the harsh reality is that the creditors shouldn't be subjected to a lifestyle choice. (See Buffalo Law Review: Lifestyles of the Not-So-Rich or Famous: The Role of Choice and Sacrifice in Bankruptcy) In other words, there was no legal obligation for the debtor to pay anything for that family; and it was a family in all aspects of the definition. But the bankruptcy laws and precedent reflect that it's a court of equity. A "court of equity" sounds nice, but it's actually not cut and dry.

These things can be very complex and turn on a dime.

These are decisions made based on empirical evidence rather than a handbook that reads "you get $100 for each child in childcare." What ifr childcare costs more for one person than another? How do you put that into a formula? The IRS Collection Financial Standards (FCS) are the closest to what empirical evidence (census, locality) that they can come to most of these different expenses. The United States Trustee (UST) uses the IRS CFS as almost gospel. (Not so funny is that the IRS is actually tougher.)

Now, generally speaking -- and, again, this depends on the Trustee, court, and the specific debtor -- entertainment should be modest. We had annual passes to SeaWorld and Busch Gardens which cost $33.00 for 3 of us per month. That was our entertainment. We learned how to make the best of different thing. Harsh, yes, but it's the reality. Think of this, the court will say "if you didn't have the money, would you spend that money on karate for the kids? No... right? So why should the court impose that choice on your creditors?"

Difficult questions to answer.

In the end, the goal of the attorney and debtor, in a borderline case, is to make sure they are not embelishing expenses or creating expenses which they are not currently paying. There's a difference between putting off medical care and not going out to eat twice a week. (These are just examples.)

flashoflight mentioned the portion on the Means Test for "special" circumstances. Believe me when you read this, the Trustee will battle you for anything you put in special circumstances. "A number of courts construe the provision so strictly that they essentially require that debtor prove “extraordinary” circumstances before the court will allow an adjustment of debtor’s income or expense figures for means testing." (Roma Perez, Not "Special" Enough for Chapter 7: An Analysis of the Special Circumstances Provision of the Bankruptcy Code, 61 Clev. St. L. Rev. 983 (2013))

For most debtors it's not that complex.

For debtors with significant income and/or borderline over-the-median you just must be prepared to demonstrate that you are not a candidate for a Chapter 13. It's a dance and a skillful and seasoned attorney can usually navigate these Trustee infested waters.

At least, those are my thoughts on why some cases can become so complex.

[clb24ecb1]

I know the frustration and it's also frustrating for the judges. I read one opinion where the judge said that although the debtor's girlfriend (significant other) and her children all lived with him for years, that the harsh reality is that the creditors shouldn't be subjected to a... and this is what she wrote... lifestyle choice. In other words, there was no legal obligation for the debtor to pay anything for that family; and it was a family in all aspects of the definition. But the bankruptcy laws and precedent reflect that it's a court of equity. A "court of equity" sounds nice, but it's actually not cut and dry.

These are decisions made based on empirical evidence rather than a handbook that reads "you get $100 for each child in childcare." What ifr childcare costs more for one person than another? How do you put that into a formula? The IRS Collection Financial Standards (FCS) are the closest to what empirical evidence (census, locality) that they can come to most of these different expenses. The United States Trustee (UST) uses the IRS CFS as almost gospel. (Not so funny is that the IRS is actually tougher.)

Now, generally speaking -- and, again, this depends on the Trustee, court, and the specific debtor -- entertainment should be modest. We had annual passes to SeaWorld and Busch Gardens which cost $33.00 for 3 of us per month. That was our entertainment. We learned how to make the best of different thing. Harsh, yes, but it's the reality. Think of this, the court will say "if you didn't have the money, would you spend that money on karate for the kids? No... right? So why should the court impose that choice on your creditors?" Difficult questions to answer.

In the end, the goal of the attorney and debtor, in a borderline case, is to make sure they are not embelishing expenses or creating expenses which they are not currently paying. There's a difference between putting off medical care and not going out to eat twice a week. (These are just examples.)

flashoflight mentioned the portion on the Means Test for "special" circumstances. Believe me when you read this, the Trustee will battle you for anything you put in special circumstances. "A number of courts construe the provision so strictly that they essentially require that debtor prove “extraordinary” circumstances before the court will allow an adjustment of debtor’s income or expense figures for means testing." (Roma Perez, Not "Special" Enough for Chapter 7: An Analysis of the Special Circumstances Provision of the Bankruptcy Code, 61 Clev. St. L. Rev. 983 (2013))

For most debtors it's not this complex. For debtors with significant income and/or borderline over-the-median you just must be prepared to demonstrate that you are not a candidate for a Chapter 13.

I completely get it. However- again it’s frustrating that let’s say our Netflix/Hulu stuff flies through as “entertainment” but stuff for kids doesn’t? I’d rather cut the NF/Hulu stuff. If I’m allowed $250 (or $100, or whatever) “entertainment” for the family, I can work within that with our priorities.

Our attorney is ready to file but I’m second guessing it and wondering if I should just letting everything charge off and trying to arrange settlements. I guess we can do that even if our case is dismissed but the amount of Xanax I’m going to need over these next few months is going to be insane.

[justbroke]

I completely get it. However- again it’s frustrating that let’s say our Netflix/Hulu stuff flies through as “entertainment” but stuff for kids doesn’t? I’d rather cut the NF/Hulu stuff. If I’m allowed $250 (or $100, or whatever) “entertainment” for the family, I can work within that with our priorities.

But, that's just it. I created a category called "entertainment" and I put $50 per person ($200/month). I didn't clarify what the amounts were used for. The Trustee didn't question that amount in my district. The Trustee may not question if you put $350/month (7 people x $50/month) in your District. But, the Trustee would likely ask if you put "gym membership" and other items which total hundreds of dollars.

The key is that you need to be able to articulate if it's for the health or safety of your family.

In the end, everything we are discussing now is all academic. Unless and until the Trustee or United States Trustee (UST) gets interesting in looking deeper into your expenses, we're just speculating. However, our posts -- and speculation -- is based on actual cases.

Our attorney is ready to file but I’m second guessing it and wondering if I should just letting everything charge off and trying to arrange settlements. I guess we can do that even if our case is dismissed but the amount of Xanax I’m going to need over these next few months is going to be insane.

If your attorney is ready to file and you trust your attorney, go for it. The worse case is Chapter 13. Is that what causes you to panic? Chapter 13 would still provide relief, but it's a longer road.

[clb24ecb1]

But, that's just it. I created a category called "entertainment" and I put $50 per person ($200/month). I didn't clarify what the amounts were used for. The Trustee didn't question that amount in my district. The Trustee may not question if you put $350/month (7 people x $50/month) in your District. But, the Trustee would likely ask if you put "gym membership" and other items which total hundreds of dollars.

The key is that you need to be able to articulate if it's for the health or safety of your family.

In the end, everything we are discussing now is all academic. Unless and until the Trustee or United States Trustee (UST) gets interesting in looking deeper into your expenses, we're just speculating. However, our posts -- and speculation -- is based on actual cases.

If your attorney is ready to file and you trust your attorney, go for it. The worse case is Chapter 13. Is that what causes you to panic? Chapter 13 would still provide relief, but it's a longer road.

I think so, because I’m afraid of tying ourselves down to a Chapter 13 payment with so much unknown on the horizon. Future raises for 5 years going to a trustee? We have kids in competitive sports and it’s just completely out of the question to pull them from those sports. It seems as though we wouldn’t have options to even better ourselves for over 5 years. If I let everything charge off at least I’m in the driver’s seat instead of a trustee for five years. Does that make sense?

[shipo]

I think so, because I’m afraid of tying ourselves down to a Chapter 13 payment with so much unknown on the horizon. Future raises for 5 years going to a trustee? We have kids in competitive sports and it’s just completely out of the question to pull them from those sports. It seems as though we wouldn’t have options to even better ourselves for over 5 years. If I let everything charge off at least I’m in the driver’s seat instead of a trustee for five years. Does that make sense?

Hopefully others here will correct me if I'm wrong, but if you play the game of letting "everything charge off", I believe that means you're still far from being in the driver's seat. Why? A thing known as a 1099-C; a little gift given to you each time a lender needs to write down/off a debt outside of bankruptcy. Once again, as I understand things, a 1099-C means 100% of the written down debt is assumed to be "income"; income which is taxable like any other income. So, if you are successful at getting the $50,000 written down, then you will get a 1099-C showing "income" of $50,000 and you will be liable for the taxes on that money. If you cannot pay those taxes, then the IRS comes a-callin'.

[Finallyover]

I’m so sorry for your stressful situation, I’ve been there and know all too well how overwhelming this whole process is. I hope it all goes well for you!
Forgive me, I don’t mean to pry, but on your list of expenses, it appears to be regular monthly expenses. Is there any credit card, or medical debt that you owe monthly, that your looking to get discharged? Also, I’m sure your attorney has already looked into this, but does your home have enough non exempt equity, that a chapter 7 trustee could go after? That was my situation and I had to convert to a ch 13.
I know every situation is different, but I was scared to of being tied down to a 13 for five years. Believe me when I say, it was the best thing that could’ve happened. Yes, there were months when I felt I could lose everything, and stressed when I thought we couldn’t meet trustee payment. But in the end, we completed it with a discharge and best of all, really learned how to budget. Like you, my biggest fear was my kids and their activities, I didn’t want them to suffer because of my mistakes. But, not one of them(I have 4), gave up one thing. They played every sport they wanted and we even put two through college during it.
I just wanted to share that with you to give you something positive thru this process. I wish you the best of luck!!

[clb24ecb1]

I’m so sorry for your stressful situation, I’ve been there and know all too well how overwhelming this whole process is. I hope it all goes well for you!
Forgive me, I don’t mean to pry, but on your list of expenses, it appears to be regular monthly expenses. Is there any credit card, or medical debt that you owe monthly, that your looking to get discharged? Also, I’m sure your attorney has already looked into this, but does your home have enough non exempt equity, that a chapter 7 trustee could go after? That was my situation and I had to convert to a ch 13.
I know every situation is different, but I was scared to of being tied down to a 13 for five years. Believe me when I say, it was the best thing that could’ve happened. Yes, there were months when I felt I could lose everything, and stressed when I thought we couldn’t meet trustee payment. But in the end, we completed it with a discharge and best of all, really learned how to budget. Like you, my biggest fear was my kids and their activities, I didn’t want them to suffer because of my mistakes. But, not one of them(I have 4), gave up one thing. They played every sport they wanted and we even put two through college during it.
I just wanted to share that with you to give you something positive thru this process. I wish you the best of luck!!

Medical/credit cars/personal loan/ negative vehicle equity. We have a small enough amount of equity in our home to use federal exemptions.

[clb24ecb1]

Hopefully others here will correct me if I'm wrong, but if you play the game of letting "everything charge off", I believe that means you're still far from being in the driver's seat. Why? A thing known as a 1099-C; a little gift given to you each time a lender needs to write down/off a debt outside of bankruptcy. Once again, as I understand things, a 1099-C means 100% of the written down debt is assumed to be "income"; income which is taxable like any other income. So, if you are successful at getting the $50,000 written down, then you will get a 1099-C showing "income" of $50,000 and you will be liable for the taxes on that money. If you cannot pay those taxes, then the IRS comes a-callin'.

Thanks for this thought! BUT if let’s say next year my husband gets a grade increase at his job is it better financially to be able to keep the extra money from the job for an extra four years and pay taxes or pay it to a trustee? I’m just thinking out loud because honestly I have no idea.

[justbroke]

Thanks for this thought! BUT if let’s say next year my husband gets a grade increase at his job is it better financially to be able to keep the extra money from the job for an extra four years and pay taxes or pay it to a trustee? I’m just thinking out loud because honestly I have no idea.

The Chapter 13 Trustees don't always take raises. If it's a simple CoLA (cost of living) increase, it is highly unlikely that the Trustee or even your attorney will bat-an-eyelash. Trustees are looking for "major" increases in pay. We tend to like to use 10% as the threshold. A recent survey of Chapter 13 Trustees showed that they pushed a Motion to Modify Confirmed Plan (to increase the payments) on fewer than 10% of the cases. For most Chapter 13 Trustees they just want you to pay on time and keep in the plan. If your Trustee doesn't require you to send a copy of your IRS Tax Returns, then they really don't care how much more that you make (possible in some districts).

I think your attorney is comfortable with the Chapter 7, so let's just assume you're going to receive a Chapter 7 discharge.

[Faith527]

Hi, your schedule is very detailed and impressive. I am a newbie but what jumped out at me. I note you have $X allocated for out of pocket medical for ***"Includes special needs meds for daughter/son @$200/mo". I too have special needs child and we incur a tidy sum of money tutoring her (both private tutors and a special tutoring school). Our lawyer put $100 a month for tutoring (which is less than what we actually pay for her over the course of a year)........along with her diagnosis. Perhaps run this by your lawyer? Something to think about - it jumped out at me as our kid's special needs' expenses are quite high. Good Luck! Faith.

[clb24ecb1]

But, that's just it. I created a category called "entertainment" and I put $50 per person ($200/month). I didn't clarify what the amounts were used for. The Trustee didn't question that amount in my district. The Trustee may not question if you put $350/month (7 people x $50/month) in your District. But, the Trustee would likely ask if you put "gym membership" and other items which total hundreds of dollars.

The key is that you need to be able to articulate if it's for the health or safety of your family.

In the end, everything we are discussing now is all academic. Unless and until the Trustee or United States Trustee (UST) gets interesting in looking deeper into your expenses, we're just speculating. However, our posts -- and speculation -- is based on actual cases.

If your attorney is ready to file and you trust your attorney, go for it. The worse case is Chapter 13. Is that what causes you to panic? Chapter 13 would still provide relief, but it's a longer road.

This makes sense! I'll see how my lawyer grouped things. I just sent him the budget and he lumped things together. The form he gave me was grouped and much simpler but I made one out that was super detailed, somewhat for my benefit too.

[clb24ecb1]

Hi, your schedule is very detailed and impressive. I am a newbie but what jumped out at me. I note you have $X allocated for out of pocket medical for ***"Includes special needs meds for daughter/son @$200/mo". I too have special needs child and we incur a tidy sum of money tutoring her (both private tutors and a special tutoring school). Our lawyer put $100 a month for tutoring (which is less than what we actually pay for her over the course of a year)........along with her diagnosis. Perhaps run this by your lawyer? Something to think about - it jumped out at me as our kid's special needs' expenses are quite high. Good Luck! Faith.

Our two youngest kiddos are adopted and HIV+. I don't think a trustee is going to blink at their medicine/specialist visit costs if they ask about specific diagnosis. We have to travel 4 hours to see a specialist 3/4 times a year as well. Lots of blood draws/labs/etc. It's easy to manage on a day by day, but we've been putting a ton of expenses (especially meds) on credit cards while trying to keep up with other bills. We were actually $1,500 in the whole with the pharmacy but because it's a non profit pharmacy they just keep sending them every month, but we can't keep just wracking up more debt.