Expense Records

[treehugger1]

I changed my paycheck from direct deposit to paper check. I think things might get a bit messy for me in the next few months prior to potentially filing for 13. I've used my checking account to pay all bills ACH the past several years and nearly every creditor has my routing and account number. A couple of creditors are probably not beyond debiting my account without my authorization, even though this is quite illegal. I have another account at a credit union where my car payments are set up and I'll use that to put just enough of my paycheck into to cover rent, other secured debt, etc. If I pay everything else with cash, should I keep receipts for all my transactions? Should I build a history of actual expenses so I can have "proof" of what I put on my future Schedule J? What does one do in a BK13 if one does not keep receipts? Can one argue for the IRS standards?

[CATCHMEIFYOUCAN]

Treehugger

I changed my paycheck from direct deposit to paper check. I think things might get a bit messy for me in the next few months prior to potentially filing for 13. I've used my checking account to pay all bills ACH the past several years and nearly every creditor has my routing and account number. A couple of creditors are probably not beyond debiting my account without my authorization, even though this is quite illegal. I have another account at a credit union where my car payments are set up and I'll use that to put just enough of my paycheck into to cover rent, other secured debt, etc. If I pay everything else with cash, should I keep receipts for all my transactions?

It wouldn't hurt to keep receipts to prove something that is above the IRS standards allow, in case the Trustee inquires.

Should I build a history of actual expenses so I can have "proof" of what I put on my future Schedule J? What does one do in a BK13 if one does not keep receipts? Can one argue for the IRS standards?

I didn't have any receipts when I was in Ch13, all my spending reflected through my bank statements. I also had nothing out of the ordinary except big cash withdrawals (towards gambling) at the time. But the Trustee never questioned those.

You could "argue," the IRS standards by receipts - I guess. If it seems unreasonable here's where the proof comes into play, but at the same time the Trustee could still say their unreasonable expenses - DEPENDING on what they are for.

Best Wishes, Catchmeifyoucan

[treehugger1]

Thanks, Catchme. Did your attorney (the short time you flirted with 13) simply use the standards?

On another note, I had a recent development involving BOFA/MBNA related to a special five year pay-off plan. I'm going to look into their suggestion. If can get wriiten arrangements with all my unsecureds then I might get a better five year deal through them. I'd even save myself the trustee take of 10%. I'm treading cautiously, but there may be some options that are open to those of us with zero assets.

That being said, I am still preparing for a future 13 if push comes to shove.

[SinkingFast]

Tree,........

When considering or filing BK, you can never be Over Prepared.

We did just about the same thing as you. Stopped direct deposits. Quit using checks to pay bills. Used the Debit Card to purchase everything, including Money Orders to pay bills. Every receipt was saved. For months. To document our cash and carry lifestyle.

If you save receipts, you have proof where you spend more than the Schedules Allowables in what ever areas.

Say you have a medical condition that requires a special diet. Your food costs might be more than the Allowable. You'll have medical documentation AND your receipts to prove your actual costs.

If you're a large person and your clothes cost more,.......... Or you're tall and cannot buy off the rack in regular stores,............ Receipts will document your added costs for clothes.

If you commute a long distance to work,............ Receipts will document you added gasoline, maintenance, and repair costs for transportation.

[treehugger1]

SinkingFast,

Thanks. I can't believe how much just thinking about bankruptcy can change one's approach to their financial setting. It makes good sense to prepare, even if something might be negotiated in the next several months. I appreciate all the input and education related to preparation, rather than having to file in some hurried reactive manner. I realize that many folks have no choice, but I wonder how many could have prepared (and, maybe avoided BK), if they had access to the comments and discussions on a site such as this. There are so many options. Once I discovered that BK was one of those options, it really empowered me to begin cleaning up my financial situation.

[CATCHMEIFYOUCAN]

THugger

Thanks, Catchme. Did your attorney (the short time you flirted with 13) simply use the standards?

Pretty much, he said had he known that I really lived a frugal lifestyle he would have used up to the maximum standards allowed.

On another note, I had a recent development involving BOFA/MBNA related to a special five year pay-off plan. I'm going to look into their suggestion. If can get wriiten arrangements with all my unsecureds then I might get a better five year deal through them. I'd even save myself the trustee take of 10%. I'm treading cautiously, but there may be some options that are open to those of us with zero assets.

I saw your other post about this, honestly from what I've been reading I wouldn't go the THERE. Because of the tax consequences in the end by negotiating with the creditors. BK is the safetest way to go! If I had a choice between struggling to pay back creditors the next five years OR pay nothing for a couple of months (Ch7) - I choose to pay nothing! AND start FRESH - your credit is already tainted (I GUESS)

That being said, I am still preparing for a future 13 if push comes to shove.

Either way, you sound like your are well prepared no matter what direction you decide. I know that most of us all want to do the right thing, some feel more of a moral obligation - I GUESS. Not me, I know I put myself in this situation but if there is a way out. I'm going go for it!

Best Wishes, Catchmeifyoucan