Schedule J input please

[xena]

family of 6 is there anything too high too low i can adjust? we would like to not reaffirm mortgage and 3rd car. Is this possible? we are filing ch 7 soon.

mortgage = 1743 (fixed)
heloc = 197 (variable rate)
associaton = 67
local tax = 49 (work out of state)
water = 52
phone/cell = 200
electric = 100
heat = 110
cable = 143
food = 1000
clothing 600
laundry = 100
medical/dental = 360
transportation = 992 (ownership cost - 2 car loans; 3 actually but we want to get rid of the 3rd)
recreation = 100
auto insurance = 397 (for 3 cars)
support paid = 160
auto loan = 1293
student loan = 143
ezpass=25
school lunch for kid in school=35

total expense = 7948
net = 5200

[justbroke]

So, are you under-median or not? I don't know how you are even surviving when your expenses exceed your income by 45% or more.

You're going to have trouble with:

• auto loan = 1293 -- the maximum allowable is $489 per car and up to two cars, although some Districts may allow a third for a third licensed driver. Anyhow, you may expect trouble in this area. Likewise, the insurance for 3 cars may be questioned.
• food = 1000 -- should be okay... almost pushing it.
• cable = 143 -- most Trustees will find this too high. Only basic cable is usually "allowed" (about $50/month)
• clothing 600 -- way too high. You only get about $60/month per person for clothing (apparel) and that includes cleaning! So your laundry of $100/month may be too high
• transportation = 992 -- this is going to raise some eyebrows! Combined with your debt service on the cars of $1,293, you're at about $2,200/month for vehicles and your net income is only $5,200. That's 42% of your take-home alone. Something has to change.
• student loan = 143 -- probably won't be allowed to be claimed for a Chapter 7, especially if you're over-the-median

[momofthree]

First of all, I think your math may be a bit off, because I get $7866 when totaling up your expenses.

I would expect them to question clothing/laundry, cable, cell phone, & auto insurance (are you insuring teenagers? That is SUPER high! May be time for them to pay their own way).

And as JB mentioned, they may not allow the student loan to be included on the schedule J since they go into forebearance in a ch.13 (even if you've maxed out your forebearance time already)

Question on your "ownership cost" that is supposed to represent your car payments, you appear to be counting that twice. In other words, the $1243 most likely wouldn't be allowed at all since you've already counted the operation expense above. You also get to claim an "operating expense" (line 22A of means test) to cover gas and insurance, which is usually around $400/mo total for 2+ cars. You're already at that limit with just your insurance.

Going thru all of your expenses and even cutting out all the ones I listed above, you're still in the negative each month, so it looks like you'll be fine as far as passing the means test. However, you need to do a major budget overhaul in order to be able to survive post-bk without the use of credit. Things like cable and cellphones, while convenient, are not necessities. And the 3rd car will definitely need to go. Like I mentioned above, teenagers in the home may need to start pulling their own weight--contributing to their car insurance, gas, and clothing expenses. Something has to give and if you want to keep the house and 2 cars, then your lifestyle will have to change drastically.

Edited to add: they will use your gross income each month. I see you've provided your net. Do you normally get a large refund each year? If so, you will need to adjust your withholding so that you get more in your paycheck each month, and this could potentially push you into a ch.13 IF they question all of the above expenses that I listed, BUT I think you'll probably be fine seeing that you're a family of 6.

[xena]

JB: Yes we are under median. We were surviving until I quit my second job. I have 3 little kids which 2 are still in diapers and my mom lives with us which helps with the daycare.

mortgage = 1743 (fixed)
heloc = 197 (variable rate)
associaton = 67
local tax = 49 (work out of state)
water = 52
phone/cell = 200
electric = 100
heat = 110
cable = 127 (adjusted) i know still a bit high
food = 800 (adjusted)
clothing = 300 (adjusted)
laundry = 60 (adjusted)
medical/dental = 360
transportation = 400 (actual cost; i travel to work 50 miles each way)
recreation = 50
auto loan = 1293 (we are going to include 3rd car in BK which will bring our car payments to 667)
auto insurance = 397 (if we are able to include the 3rd car in BK, then this will bring our insurance to 233)
support paid = 160
ezpass=25
school lunch for kid in school=35

Total Expenses= 5,795.04
Gross Avg = 7,300
Net = 5,200

DMI = -595.04 + i do have to pay my student loan 143 so my DMI is = -738.04

Husband pays LTD 112/mo
I pay 464.08/mo for LTD & healthcare insurance for the family
401k contribution 223.48,mo
401k loan 198.34/mo

With this adjusted monthly expenses, do i have a chance of not reaffirming my mortgage? I want to be able to try to work with my mortgage company to lower my interest for my 1st and possibly settle my HELOC.

I still owe 203K(1st Mort 7.125 fixed), 53K(HELOC-variable). Zillow shows house is worth 219K.

We are getting closer to file and I'm so stress out. I'm losing sleep, no appetite. I am just a wreck. Please, please, I need all the advise I can get.

[momofthree]

I would NOT adjust your food budget down. For a family of 6, claiming $1000-$1200 in groceries per month is okay.

You'll want that figure to be high because a 401k loan, student loan, and 401k contribution may be objected to when figuring out if you can fund a ch.13. It looks like there may be a substantial amount of taxes being taken out, which they may want you to adjust down to increase your net pay. You didn't mention whether or not you received a tax refund this year. You'll want to keep your allowable expenses high, which is looks like it already is except groceries--so don't reduce them. Also, add in some money for monthly home maintenance, $100 or so should be considered reasonable. You want your budget to show either breaking even or slightly negative if they were to object to expenses and/or 401k.

Being below median definitely helps your case though....

[xena]

Yes we did receive a refund. I claim 2 and my husband 2. We don't want to pay at the end of the year that's why we did it like that. Other than increasing my groceries and adding home maintence, is there anything else I can I that I might be forgetting that you can think of? Would 200 home maintenace reasonable?

[justbroke]

Yes, I wouldn't touch the food amount. You're right in the sweet spot. Anyhow, since you're under the median, you probably won't be bothered (scrutinized), but you should prepare for it anyhow. That doesn't mean adjusting your numbers... it means be prepared to defend the numbers or being prepared to lose a particular expense and still qualify.

[punisher338]

Yes, I wouldn't touch the food amount. You're right in the sweet spot. Anyhow, since you're under the median, you probably won't be bothered (scrutinized), but you should prepare for it anyhow. That doesn't mean adjusting your numbers... it means be prepared to defend the numbers or being prepared to lose a particular expense and still qualify.

Great comment!

[Pandora]

JB: Yes we are under median. We were surviving until I quit my second job. I have 3 little kids which 2 are still in diapers and my mom lives with us which helps with the daycare.

mortgage = 1743 (fixed)
heloc = 197 (variable rate)
associaton = 67
local tax = 49 (work out of state)
water = 52
phone/cell = 200
electric = 100
heat = 110
cable = 127 (adjusted) i know still a bit high
food = 800 (adjusted)
clothing = 300 (adjusted)
laundry = 60 (adjusted)
medical/dental = 360
transportation = 400 (actual cost; i travel to work 50 miles each way)
recreation = 50
auto loan = 1293 (we are going to include 3rd car in BK which will bring our car payments to 667)
auto insurance = 397 (if we are able to include the 3rd car in BK, then this will bring our insurance to 233)
support paid = 160
ezpass=25
school lunch for kid in school=35

Total Expenses= 5,795.04
Gross Avg = 7,300
Net = 5,200

DMI = -595.04 + i do have to pay my student loan 143 so my DMI is = -738.04

Husband pays LTD 112/mo
I pay 464.08/mo for LTD & healthcare insurance for the family
401k contribution 223.48,mo
401k loan 198.34/mo

With this adjusted monthly expenses, do i have a chance of not reaffirming my mortgage? I want to be able to try to work with my mortgage company to lower my interest for my 1st and possibly settle my HELOC.

I still owe 203K(1st Mort 7.125 fixed), 53K(HELOC-variable). Zillow shows house is worth 219K.

We are getting closer to file and I'm so stress out. I'm losing sleep, no appetite. I am just a wreck. Please, please, I need all the advise I can get.

I'd keep this at this amount - as when you file BK, inevitably your insurance will go up unless you are in one of the 14 states that do not use credit profiling for rates ;) Ours did...by $35.00 a month just because of filing.

[SMinGA]

I can see why you want to let a car go...

First thoughts: it should not be a problem to surrender one of the vehicles. With so much negative flow each month, perhaps see about returning it to the lender just before you file. That way you can cancel the insurance, and won't be stuck with having to insure it for a few more months. (Once you file, the automatic stay delays the lender's ability to come get it.) If you remove that payment, the insurance, etc. - how much does that improve your flow?

$600 for clothing seems high. That comes out to $7,200 a year. I don't have the IRS guidelines in front of me, but I think ~$150-175 for clothing/apparel for a family of 6 to be more reasonable.

Keep in mind ch. 7 will discharge your unsecured debts, but you have to find a way to live with the money you have each month. Otherwise after discharge, things will not be any better for you. Cutting back on cable/cell can help in small ways. But can you truly afford your house? Almost 40% of your net is going to your house, before you consider utilities.

[Pandora]

we were only allowed $75.00 for clothing for a family of 3... even though we're in a 13, we are under the means... but thats all we were allowed.

So the $150-175 seems about right for a family of 6, as SMinGA noted.

[SMinGA]

Some things to look out for: the 401k loan payment is NOT considered an expense in ch. 7, as I understand it. So that will not lower your DMI. The trustee might not consider the student loan as well - since it can be deferred if you do a ch. 13.

Ultimately I suspect you'll be able to file ch. 7 without any real problems. You will need to show that your expenses exceed your income by more than these amounts so filing with dmi of -$350-450 won't hurt. I agree that not reaffirming the mortgage is in your best interest - because then if you cannot get anywhere with a modification you can always walk if needed.

On your earnings... Make sure you're calculating as correctly as possible. Such as taking annual earnings and dividing by 12. A common mistake is people who get paid every 2 weeks considering 2 checks = 1 month's income. It doesn't.

Also, if you normally get a tax refund - adjust withholding to decrease taxes taken out. Otherwise the trustee could see that you need to make this adjustment (a tax refund means your net pay should have been higher) and 'find' hundreds of $s per month to fund a ch. 13 payment. If you're getting a tax refund, then you really should have more net pay per month. If you're under median w/ 3 children - you may even be able to claim exempt on federal withholdings, and still get a refund from child tax credits. (We do - can't do anything about that.) The IRS site has a calculator for you to enter your income, family size, etc. and indicate how you should change withholdings.

[xena]

mortgage = 1743 (fixed)
heloc = 197 (variable rate)
associaton = 67
local tax = 49 (work out of state)
water = 52
phone/cable and cell = 200
electric = 100
heat = 110
cable = 127 (adjusted) i know still a bit high
food = 1000 (adjusted as per advise of momofthree and JB)
home maintenance = 100 (suggested by momofthree)
clothing = 175 (adjusted as SminGA suggested)
laundry = 60 (adjusted)
medical/dental = 360
transportation = 400 (actual cost; i travel to work 50 miles each way)
recreation = 50
auto loan = 1293 (we are going to include 3rd car in BK which will bring our car payments to 667)
auto insurance = 397 (if we are able to include the 3rd car in BK, then this will bring our insurance to 233)
support paid = 160
ezpass=25
school lunch for kid in school=35

Total Expenses= 5910 (increase food, decrese clothes & added home maintenance)
Gross Avg = 7,300 (i forgot to mention that this is not fix; my income is fix but not husband)
Net = ~5,200

Husband pays LTD 112/mo
I pay 464.08/mo for LTD & healthcare insurance for the family
401k contribution 223.48,mo
401k loan 198.34/mo

With this adjusted monthly expenses, do i have a chance of not reaffirming my mortgage? I want to be able to try to work with my mortgage company to lower my interest for my 1st and possibly settle my HELOC.

I still owe 203K(1st Mort 7.125 fixed), 53K(HELOC-variable). Zillow shows house is worth 219K.

We are getting closer to file and I'm so stress out. I'm losing sleep, no appetite. I am just a wreck. Please, please, I need all the advise I can get.[/QUOTE]


Pandora: Are you advising to keep my expenses as is or my car payments?

SMinGA: Should I adjust my withholding now before I file in 2 weeks? We are family of 6 and like I mention, I claim 2 and husband claim 2. If each of us claim 3 each, would this put us on paying tax later? Reason we are claiming 2 & 2 is that we don't want to end up paying at the end. Please advise.

[momofthree]

SMinGA: Should I adjust my withholding now before I file in 2 weeks? We are family of 6 and like I mention, I claim 2 and husband claim 2. If each of us claim 3 each, would this put us on paying tax later? Reason we are claiming 2 & 2 is that we don't want to end up paying at the end. Please advise.

How much of a tax refund do you normally receive? I would think with 4 kids you'd get a pretty hefty return each year (at least $5000) with the 2 of you only claiming married & 2 on your W4. When you have a family of 6, you should both be able to claim married & 6 on your W4 and come close to breaking even and that's if you're not itemizing!

My dh claims married and 8 for 1/2 the year and exempt (no taxes taken out) for the other half and we still got back $5400 this year, and we only have 3 kids!

Adjusting up to married and 3 each may still not be enough.

Honestly, if you're under the median income and have 4 kids (+ home mortgage interest & property tax & whatever else you itemize), and you're not getting a large refund each year, then you probably need to find yourself a better accountant, lol.

[SMinGA]

I think you should discuss your withholdings/income tax refund situation with your attorney. And assuming the atty agrees, change withholdings asap to decrease your taxes taken out which will increase your net. File your schedules with the accurate net income.

If you don't, here is what can happen:

Trustee is going to review your schedules, your income stubs, and your tax returns for prior years. Trustee may see that you're over-withholding and think: they're trying to get away with a ch. 7 when they really have disposable income. They're just hiding it in their tax withholdings, knowing they'll get it back in February.

At that point, the trustee might insist that you correct withholdings, and the increase in net income could be enough to force you into ch. 13. Where if you make the fix now, you should be able to show your expenses take up even the higher net income.

Browse around the IRS website, or search by Google for an IRS tax calculator. You can enter #s to show filing status, exemptions, income amounts, and how much tax already withheld. It will advise you of how to adjust your withholdings for the rest of the year. Then you should visit the tool again at the beginning of 2011.