Very confused about Schedules I & J -

[daylate]

I have been reading lots about allowed expenses on Schedule J and my head is spinning. I also am a bit confused about the difference you are allowed between I & J. My attorney said that anything more than $187 a month and you're going 13.

If I use real expenses based on last 6 months to a year when I have been scrimping or postponing then in some categories like clothing, medical,dental, etc I can't prove anything on a prospective basis. If i go to a dentist and get an estimate for dental work then I would probably have 200-300 a month for the next year or so. Which would be hard to actually pay.

In some cases, like rent and utilities, if I'm reading the chart right it says I'm over by 400-500 a month. actual food slightly over also. Its a drug of choice.

I am currently paying a huge amount (nearly 2k/month) for health insurance. If I continue to pay that I'm negative by so much that it can't continue but for filing it sure doesn't make being forced into a 13 unlikely). But if I reduce or cancel the insurance then I'm totally exposed to a big expense that I couldn't handle. If I get a new job that I'm currently interviewing for then this expense will be reduced (hopefully) but my new salary will when added to soc sec benefits put me slightly over the median level on a gross basis and maybe by 200-300 over on a net basis.

In many threads I read what appears to be suggestions by folks here and by attorneys to "adjust" expenses to reflect IRS standards where appropriate and use real when they are close but not too far out of whack. And what about those expenses that come out of the blue? With no assets, no credit and a less than 187 a month disposable income that seems like a potential very big problem.

I suppose I could buy a second car which would pretty much put me into a negative DMI but that seems like cutting off my nose to spite my face. Or I could look for a job that pays less so that in reality I stay in the hole but for purposes of this process would be golden for a 7.

Encouragement and suggestions would be appreciated. Today is a very butterfly filled day-thanks

[backtoschool]

The best thing to do is to not overguess things but to put your actual expenses down. Expenses over the allowable irs standards will be questioned by the US trustee. $2,000 a month for medical insurance will be questioned if it is a deluxe plan. Food over the allowable amount will be questioned.

Other things that will be questioned by the US Trustee:

Deluxe cable and cell phone plans
High clothing and entertainment expenses
Excessive last minute tithing that is not backed by receipts
Mortgages on houses that are being given up in the bk
Student loan expenses (not allowed in most districts)
Car payments over 500 dollars a month

That is not a complete list, but will give you an idea of what to expect.

Your lawyer is correct. It only takes around $187 a month of disposable income to throw you into a chapter 13. US trustees look to trim the discretionary expenses to get to that number.

[janie]

Daylate, I am feeling the same way & would love to read more on the I & J.
$187 so scary!

[tcreegan]

Hi all, Hi daylate,

Go here for the IRS standards on expenses:

http://www.justice.gov/ust/eo/bapcpa/20101101/meanstesting.htm

Use these to compare to your actual expenses, be ready to document anything much over the IRS standards

Go here for a copy of Schedule J, gives you a sense of what they are looking for:

http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/BK_Forms_1207/B_006J_1207f.pdf

Schedule J is 'forward looking' and should have your post-BK expense amounts, not the 'totally broke going into BK' figures. If you have been broke so long you can't remember what 'normal' looks like, go look at the IRS standards

The 2K insurance payment is going to be a problem. Go to a local insurance agent and get some quotes on similar plans. Need to be very proactive about this...

put me slightly over the median level ...and puts you with some very good company around here, lots of evidence that it can be done and how.

Good luck w/ the wrestling match with the paperwork,

Tom in Colo

[daylate]

"The 2K insurance payment is going to be a problem. Go to a local insurance agent and get some quotes on similar plans. Need to be very proactive about this..."

No kidding its been a problem ever since I had to start paying it...LOL

Its due to age and some medical conditions-not a great policy-3k deductible-6k out of pocket per year-we tried for a lower premium higher deductible couldn't get it-don't see how trustee could object or at least not understand

[dumpinmydebt]

"The 2K insurance payment is going to be a problem. Go to a local insurance agent and get some quotes on similar plans. Need to be very proactive about this..."

No kidding its been a problem ever since I had to start paying it...LOL

Its due to age and some medical conditions-not a great policy-3k deductible-6k out of pocket per year-we tried for a lower premium higher deductible couldn't get it-don't see how trustee could object or at least not understand

If you can prove that this is your only option, then I guess they can't object. I would start getting a bunch of quotes from the big insurances companies as your proof. But I really have never heard of someone paying $2,000 per month on their plan alone (I worked at Humana). On plan and meds, yes.

Schedule J is forward looking. I would do as the others suggested and look at the standards to see where you are at.

[gman]

You never mentioned - did you pass the means test OR do you not have to do so because your last 6 months of income is UNDER the state median?

Remember, you need to think of this process as "hurdles"

• * Pass the Means Test (so you can enter court WITHOUT the presumption of abusing the system.) It is NOT impossible to FAIL the Means Test and still get a Chapter 7; it is just difficult.
  * Complete Schedule I/J (so you can continue to show UNDER $187/mo in left over income going FORWARD.)
  * "Win" in court

With that being the case - you are getting good advice above, especially concerning "other quotes" given your medical condition.

Personally, I'd START Schedule J using the "IRS Standards" that are on the Means Test for expenses. If and when I spent more, I'd INCREASE the amounts but make darned sure I had receipts of some sort.

Finally, as others have stated, there are expenses ALLOWED on Schedule J that are NOT ALLOWED on the Means Test. Reasonable entertainment is one example - and there are more.

Understand up front that the entire system is now trying to PUSH you into a Chapter 13 (and in many cases this is because the people involved make $$$ on Chapter 13 and make close to nothing on Chapter 7.)

I'd avoid a 13 at all costs UNLESS you have lots of (non-IRA/401k) assets to protect, which it sounds like you do not. Just my opinion.

Best of luck.

[tobee43]

If you can prove that this is your only option, then I guess they can't object. I would start getting a bunch of quotes from the big insurances companies as your proof. But I really have never heard of someone paying $2,000 per month on their plan alone (I worked at Humana). On plan and meds, yes.

Schedule J is forward looking. I would do as the others suggested and look at the standards to see where you are at.

the looking "forward" aspect was interesting for us when i under estimated food cost and the trustee requested i didn't let her husband know i able to feed a family on that amount.

many trustee's allow expenses not only using the federal guidelines, but also where in the country you live. in other words...you may be lucky enough to have a trustee that using common sense. a perfect example was...or is....my food expenses...i did use REAL or what i thought was REAL amounts based on our past food costs, not realizing that food costs were over double where we now live.

i felt that our trustee look at each of our line items as what was indicative and realistic for the area...but you never know what to expect, so it's always best to be as honest and real as you can be.

as back2school pointed out...you need to be mindful of certain "over" the top luxury expenses...no one needs the platinum plus direct tv package!!

[HHM]

The thing about I&J, if push comes to shove, can you PROVE you actually spend--or WILL actually spend--what you put down on Sched J. That is the key. You DO NOT use IRS standards on I&J, ever (unless that is actually what you spend )

[daylate]

Thanks HHM...the insurance premium is actually for two...

[Fallonedward]

I got 4 quotes when Hubby first lost his job ( I have one diabetic child and one adhd child) and the cheapest quote I received in writing was $1870 a month. If you are over a certain age and have chronic illness the insurance company can and will gouge the heck out of you

If you can prove that this is your only option, then I guess they can't object. I would start getting a bunch of quotes from the big insurances companies as your proof. But I really have never heard of someone paying $2,000 per month on their plan alone (I worked at Humana). On plan and meds, yes.

Schedule J is forward looking. I would do as the others suggested and look at the standards to see where you are at.

[dumpinmydebt]

I got 4 quotes when Hubby first lost his job ( I have one diabetic child and one adhd child) and the cheapest quote I received in writing was $1870 a month. If you are over a certain age and have chronic illness the insurance company can and will gouge the heck out of you

I know they will. I worked at one. I'm sure you can understand why I had to quit. lol

I would still print out those quotes to prove to them because it still sounds high. You need to prove why you are spending so much and that you have tried other options. As long as you can prove it to them, it shouldn't be an issue.

I have a medical condition that is VERY costly. I dose of what I need is $26k. I have to see a Hematologist. I may be young, but my condition is rare and costly. My quote for myself and my hubby was only $400 per month.

[debee]

The difficulty with putting down what we actually spend in many cases is that we haven't actually been spending it. Many of us (well, me, anyway) have not been eating as well as we might, or seeing the dentist, or replacing the towels with holes in them, or getting the roof leak fixed when a tarp will do, etc. If you've gotten used to living below a reasonable standard, it's hard to know what's reasonable. The new sheets seem a luxury because you've grown used to patching things. This is where the IRS standards in conjunction with the lawyer's knowledge of the local trustees is invaluable.

[Fallonedward]

This is where the IRS standards in conjunction with the lawyer's knowledge of the local trustees is invaluable. This statement is so true. I had felt that the leaky roof, furniture 25 plus years old, etc was how it is/was. This is why it is important to look to the IRS standards for your state and use it as a bit of a template. For example I was shocked that I could put close to $900 for food for my family.

The difficulty with putting down what we actually spend in many cases is that we haven't actually been spending it. Many of us (well, me, anyway) have not been eating as well as we might, or seeing the dentist, or replacing the towels with holes in them, or getting the roof leak fixed when a tarp will do, etc. If you've gotten used to living below a reasonable standard, it's hard to know what's reasonable. The new sheets seem a luxury because you've grown used to patching things. This is where the IRS standards in conjunction with the lawyer's knowledge of the local trustees is invaluable.