Please critique my Schedule J and overall CH7 plan...(Three person household)

[LadyInTheRed]

I agree with Pandora that you need to consider giving up your house. If you don't do that, you need to figure out where else you can cut expenses. Figure that out before you file. There is no point in filing BK if you are not going to be able to pay your living expenses after your discharge. You'll just end up right back where you are.

[Pandora]

also wanted to add that you're factoring in your wife's UI to pay bills - while that works now... how will you make up the difference once UI goes away?

[Pandora]

I'm guessing that a negative net income should help us in theory, at least when it comes to getting our CH7 successfully discharged, though it doesn't bode well for us post BK. I'm hoping that we can find some way to cut expenses even more, maybe I can find a new job or she can, etc...but in the meantime I'm focused on simply getting out from under the debt that is drowning us anyway. Does it look like we have all of our ducks in a row here? For simplicity's sake I am posting an abbreviated version of this below with just the categories, expenses, and total:

Mortgage (taxes included, insurance not included - 2252
Electric and heat - 330
Water and sewer - 85
Phone - 25
Other (Cable, internet, cell phones) - 245
Home maintenance - 100
Food - 639 (National Average)
Clothing - 159
Laundry and dry cleaning - 50 (Apparel and services National Average is 209)
Medical and dental - 180 (National Average)
Transportation - 684 (NYC Metro Area Average for two vehicles)
Recreation, etc... - 50
Contributions - 20
Insurance (Homeowners, life, health, auto, other) - Homeowners - 38/Auto - 220


Total: 5077

Income: 4895



Net income: -182

Food seems low - we are a family of 3 and budgeted $600, sometimes we make it..other times..we go over and have to cut from other areas. In this area you need to include pet food, diapers, wipes, health & beauty items, razors, etc.

Medical: Seems very low - while the IRS standard is $60 per person, you need to factor in co-pays, deductibles (if any), all OTC meds, all RX meds, etc.

Transporation: You own your vehicles so where is the $684 coming into play? You cant take the vehicle allowance if you have no car payment if thats where thats coming from. Remember to factor in vehicle inspections, tags, maintenance (oil changes, tire rotations, etc), gas, etc.

Insurance: If you are in a credit profiling state, be prepared for your insurance to go up all the way around. All of ours went up - including Homeowners - all due to filing BK.

Dont forget to factor in personal property taxes (if you have them), pet expenses (vets are expensive), and any other area you may have overlooked (newspaper subscriptions, trash service.). Look into getting on a budget billing plan for your oil / electricity - that way you will always know what the bill is every month.

As to the IRS standards - if you're over median many of the areas are set at the standard, however other areas are allowed to go outside of the number listed. The bigger issue I see is that your house is taking up about 50% of your income - and given you stated even after the BK is done you will have issues paying the bills - it may be time to rethink keeping your current house vs. finding another one that is less a month. Having your wife return to work will result in needing childcare - so you need to factor that in somewhere down the line post discharge as well. As to your vehicles - you need to be able to exempt both of them to keep them given they are paid for. Along those lines, they are older vehicles - what happens when one breaks down and you need another one? How will you afford that?

Some things to think about...especially given you have a child who will need continual care due to issues.

wishing you the best...

[Diesel73L]

The more time I spend on this site the more I realize that BK planning is really a long term thing...with that, here is the timeline I have come up with (our Schedule J which will represent our finances at the end of that timeline will follow):

Present to February 2012 - My wife and I are employed but will likely have to use cards here and there to meet basic expenses (gas, food, heat, etc...)

March 2012 - Stop using/paying cards in preparation for filing, saving for attorney fee, etc...this date is significant because it also puts us at the beginning of the six month lookback period for average gross income. Basically once we have not used or paid on the cards for six months our average will be down low enough to pass the means test.

June 30th, 2012 - My wife receives her last paycheck as she'll be laid off at the end of the school year due to budget cuts. Her position will be eliminated-no chance of rehire, which is basically the story for schools all over our state, so there is little to no chance of her getting a job at another school either. She will begin receiving unemployment July 1st, cutting her salary in half. At this point I will also need to increase the amount of health insurance we carry (from self to family coverage) since my job will be the only source of benefits which will knock my salary down about $200 a month.

October 2012 - File for CH7. At this point we'll have dropped just below the median for our region, so the first of the month will be the earliest we could possibly file.

Schedule J

This has probably been the most confusing part of this whole process, so I'm hoping to get some clarification on what expenses are allowable and reasonable (I know this varies district by district), because I've read conflicting advice here and can't find clear answers on the UST website either. Line by line, here goes...

1. Rent or home mortgage - 2252 This number represents principal and interest, PMI, and property taxes, but not homeowners insurance. For a household in my county, the allowable local housing and utilities standards are $682 for "Non-Mortgage" expenses, and $2014 for "Mortgage/Rent." The breakdown of these is about as clear as mud on the UST site:

Housing and Utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone and cell phone. The tables include five categories for one, two, three, four, and five or more persons in a household.

My initial interpretation of this was that the total number ($2014 + $682 = $2696) is essentially intended to cover lines 1 (a-b) and 2 (a-d), but since our property taxes eat up a large portion of that number ($6800 a year/$566 a month) it leaves little room for other expenses. What I'm trying to say is if I added up all of my expenses for everything mentioned in that paragraph, it would come to $2849. Does this mean I'm exceeding the standard and will come under scrutiny? Will I just need to bring in copies of bills to satisfy the trustee?

2. Utilities: (Electricity/heating fuel, Water/sewer, Telephone, Other)

-Electricity and heating I based off of a 12 month average of bills combined with the prorated cost to fill our 275 gallon oil tank twice: $330

-Water/sewer/garbage is billed quarterly so I averaged it out to monthly: $85

-Telephone I believe is $25 for landline but I need to double check as its part of a bundle.

-"Other" I used for our two cellphones ($120) plus cable and internet ($125) for a total of $245. This is yet another wrinkle because according to the housing and utilities standards cable and internet is not an allowable expense?

3. Home Maintenance - I used a $100 as a round number-again, this is something that is supposedly covered by the housing and utilities standards, but because of high property taxes its hard to fit all of the expenses into that figure.

4. Food - By the time we file my daughter will be a year old, so I used the national average for food for a family of three-$639.

5. Clothing - Again, I used the national average figure, which goes by "apparel and services" which I'm guessing refers to clothing and dry cleaning. The total figure is $209 for a family of three, so again I used that number and simply broke it up using $159 for clothing (which is probably not too far off considering our daughter will be growing like a weed) and $50 for dry cleaning which we don't do too often.

6. Laundry and dry cleaning - We have our own washer and dryer so laundry cost is really split between water/sewer, groceries, and electricity. See above for the explanation about dry cleaning: $50.

7. Medical and dental expenses - Once again used the national average of $60 a person for $180 a month which is probably right since my daughter will be born with a lung condition that will need surgery and followup care and my wife was just diagnosed with Lyme disease, but we will have decent insurance through me.

8. Transportation - We have two cars-the average for the NYC region is $684 for operating costs. I have a long commute and a high mileage truck so that should be right for me. Obviously my wife won't be driving much, but her car is 10 years old and approaching 160K.

9. Recreation, clubs, etc... - I put $50 for a nice round number. We get our news from NPR/the internet, don't belong to any clubs, don't go out much, and use our free libraries and state parks for most recreation.

10. Charitable contributions - $5 a week in the collection basket at church for a total of $20.

11. Insurance - Homeowners: $38 and Auto $220.

12. Taxes - N/A - Included in mortgage payment.

13. Installments - N/A - My truck will be paid off once we file.

14, 15, 16 - N/A.

Grand total of expenses: $5077

Average monthly income (Me working carrying family insurance and my wife on unemployment: $4895

Monthly net income: -$182

I'm guessing that a negative net income should help us in theory, at least when it comes to getting our CH7 successfully discharged, though it doesn't bode well for us post BK. I'm hoping that we can find some way to cut expenses even more, maybe I can find a new job or she can, etc...but in the meantime I'm focused on simply getting out from under the debt that is drowning us anyway. Does it look like we have all of our ducks in a row here? For simplicity's sake I am posting an abbreviated version of this below with just the categories, expenses, and total:

Mortgage (taxes included, insurance not included - 2252
Electric and heat - 330
Water and sewer - 85
Phone - 25
Other (Cable, internet, cell phones) - 245
Home maintenance - 100
Food - 639 (National Average)
Clothing - 159
Laundry and dry cleaning - 50 (Apparel and services National Average is 209)
Medical and dental - 180 (National Average)
Transportation - 684 (NYC Metro Area Average for two vehicles)
Recreation, etc... - 50
Contributions - 20
Insurance (Homeowners, life, health, auto, other) - Homeowners - 38/Auto - 220
Installments - N/A
Alimony - N/A
Support payments - N/A
Business expenses - N/A
Other - N/A

Total: 5077

Income: 4895

Net income: -182