Help with Cutting Expenses

[dovette7]

Thanks to any of you that can give me clarity and help me find ways to cut these expenses. I'm waiting on trustee objections and attorney said he will object b/c proposed plan is 1% to unsecured and our income is over 100K.
Attorney has told me that my life for the next 5 years will not be my life for the last 5. I understand this. I know it will be hard. If any of you can suggest ways to cut or if you think or have experience that trustee will object to any of this...let me know. I'm trying to prepare. 2 weeks until 341.

Family of 5 2 adults, 3 children

Rent 1750 (surrendered my home with mortg of $2900)
Rent Insurance 78
Car Insurance 180 (2 cars, 1 child)
Health Insurance 430 (independant)
Electric 150
Gas Energy 220
Cable/Phone/internet 151 (lowered to bundle. was $229)
Water 60
Waste 30
Life Insurance 220
Cell 80 (lowered from $220 b/c i was self employed and this was work #)
RX 310 (documented from dr and pharmacy and insurance does not cover)
Daycare 425 (I am not working however have a herniated disc and am not able to lift a 2 year old at this time. have dr letter)


Medical 150 (This is low. Avg over 400 a month last 3 months)
Food 825
Gas/Maint Car 425
Clothes 150
School Lunch 80
Recreation 80
Dry Clean 80
Auto Tags 86
Home Main/Supplies 100

[wrinkleigh]

You asked so the below is just my opinion, based on my own circumstances, everyone is different. We also made over $100K a few years ago, and we had to drastically change our lifestyle. It has not been easy and I still cry when I think how good I used to have it.

Based on the above -- your disposable income is about 2200 per month.

Rent -- 1750 is quite a bit -- could you find a smaller place?

Total gas and electric bills are $370 -- that seems high to me, perhaps a smaller place could take care of this too.

Could you cut out your internet and home phone since you have a cell? Then cut your cable down to basic.

May need to cut out your recreation all together

$80.00 for dry cleaning also seems a little high -- maybe you could get one of those home kits, and do it yourself, and cut out that expense.

Again, you asked for opinions, these are mine, I wish you well.

[SinkingFast]

I really only see a couple that look high to me. As compared to what our attny claimed on our Schedule J, that is. And we have a family of 6. 3 Teenaged drivers so auto insurance is much higher than yours.

Personally, I'd leave your budget as is. Wait and see where the Trustee wants to trim. Unless your attny is adamantly wanting you to do the trimming in advance that is.

[JollyGG]

I really don't see anything that looks that excessive. It looks very similar to our budget for a family of 4 (2 adults, 2 little ones). Your renters insurance seems a little high. I don't remember it being much at all when we rented. Your rent is higher than mine but may well be in line with your area.

Are you on budget billing for your gas and electric. That really made our budget easier as the bill doesn't fluctuate based on the time of year. I also discovered since we filed in the winter I had overestimated these expenses.
What you budgeted for food might even be a little on the low side.

I'd follow sinkingfast's advice and wait to see exactly which expenses the trustee see's as excessive. After all you don't want to cut your budget to the bone. You need to live with it for the next 5 years. If you don't leave yourself any wiggle room that could get tough.

[SinkingFast]

You asked so the below is just my opinion, based on my own circumstances, everyone is different. We also made over $100K a few years ago, and we had to drastically change our lifestyle. It has not been easy and I still cry when I think how good I used to have it.

Based on the above -- your disposable income is about 2200 per month.

Rent -- 1750 is quite a bit -- could you find a smaller place?

Total gas and electric bills are $370 -- that seems high to me, perhaps a smaller place could take care of this too.

Could you cut out your internet and home phone since you have a cell? Then cut your cable down to basic.

May need to cut out your recreation all together

$80.00 for dry cleaning also seems a little high -- maybe you could get one of those home kits, and do it yourself, and cut out that expense.

Again, you asked for opinions, these are mine, I wish you well.

$1750 for rent sounds high to me too, but the cost of rent is relative to where you live. We pay $1200/mo in the Midwest. If Dovette is on one of the Coasts, that could be common place.

We claimed $100/mo for Entertainment and it went thru. The Allowable Entertaiment Expense is really gonna vary according to where you live. Our attny told us taking the whole family out to dinner 1 night would count as Entertainment. If we eat at Steak and Shake or Applebees or TGI Friday's, there goes the Entertainment budget for the whole month.

I thought $80 for dry cleaning sounded high, but then I thought about my BIL. He's in commissioned Sales and HAS to have the nice starched shirts. Suits. The whole 9 yards. That's his everyday business dress. So that cost is probably relative to Dovette's Hubby's work.

Also, what little dry cleaning we do,.......... Coats and such,........ Averages out to $20-$25/mo. So $80/mo could be reasonable if you have to dress for your job.

Personally, I'd turn in as high a budget as you possibly can. The Trustee is gonna pressure you to trim areas and boost your plan payment. Too many other people posting here have had that happen to them. They've lost Pet Expenses. Had their Premium Cable service cost taken. etc.

You may have to cut back on some of those areas after your plan is Confirmed anyway. Just so you have bit of buffer each month for unexpected expenses that arise. Like a child who curbs the car resulting in a torn up tire and bent rim. Which happened to us not too long ago.

[dovette7]

I forgot to put on the budget above what's included in our plan. I don't know if that will make a difference in our budget?

Our proposed plan was $1560 per month

Secured
$27700 for Tahoe
$11500 Suv
17000 IRS (2004-2005)
$900 Computer
2500 Attorney
$1320 Unsecured (1% of $132K unsecured)


That's where my attorney is saying that trustee won't go for it. That our income should actually cover a 100% plan. And to top it off, after filing the plan, I figured out that there was not enough taxes taken out of husband's check even claiming 0.... because we won't have exemptions like previous years. After getting with accountant, it will be $650 more a month. With the proposed plan only paying 1% to unsecured and the expenses above (that's taking out the additional money for taxes) Just don't know where to cut. We just moved into this house. Same school district and can't afford to move again or get out of lease.

I am just afraid because I don't know. Here is a quote my attorney sent me today.

coming up with additional expenses will not necessarily prove to be rewarding, regardless of how necessary you may think that they are. At some point in time there will have to be compromise with regard to your budget and ultimately the trustee and the courts may be the ones to do this for you if you and I cannot come up with a sensible compromise before we go to court. Ultimately, there is going to be a bottom line of what you will HAVE to pay regardless of what your stated expenses are and if you decide that that payment is too much then you risk not being able to stay in bankruptcy if the court decides otherwise.


The additional expenses she mentions is the medical expenses that my husband had to undergo this week.

[aa06a47]

One thing that you have to try and forget is what the % payback is. The attorney and trustee really shouldn't be concerned with that as long as you meet all the other requirements of a Chapter 13 plan....and that is in a nut shell that the creditors get all disposible income for the plan term and as much as they would in a chapter 7 liquidation....yeah, there are some other good faith requirements...etc.

It is my understanding under the old law that a low % payback was often interpreted as a lack of good faith plan. But with the new law, the guidlines are throwing alot of folks into a 13 that would have been a Chapter 7 before and trustees except low % paybacks.

Good luck with it. I agree with the other folks in that the expenses don't really seem out of line as long as they can be prooved. Even if the trustee shaves some of the expenses two or three hundred bucks per month (which is possible), the % payback is going to still be small.

[SinkingFast]

Your attny is right. You are gonna have to give something somewhere. But the attny should be guiding you on where.

I gotta ask,..............

Has your attny had a go at your budget??

The reason I ask is, the budget submitted with our Petition was not really our budget. It was a budget the attny conjured up. A mix of our real life expenses and $$$ amounts the attny knew were acceptable to the Court.

We sat down with the paralegal and a Schedule J and she wrote down what all we told her for every line. She circled areas she knew we were spending more than the Court allowed. She put + signs by areas she knew we weren't spending as much as the Court would allow.

When he got done mixing our real expenses with his "Court Acceptable Expenses", our attny balanced us out to within $12 on I vs J.

Maybe a thing for you to do is sign up on PACER and look at a few, recent Ch 13 BK filings in your Court. You can use your attny's name and look at other Plans she's filed that have been Confirmed. See what kind of numbers she's looking for in different areas.

As a side note,............. In filing a Ch 13, Unsecureds have to be paid at least as much as they would get if you could file a Ch 7. With your Exemptions and such, would Unsecureds get more than 1% if you could file a Ch 7??

If the answer is yes, then you really do need to be looking at cutting things you currently consider necessary.

So maybe you ask a friend or a relative to help out at home some with the wee one and drop the day care until you're back earning a paycheck. Maybe cut off the home phone and rely on cell phones. Cut the Deluxe cable back to the Basic package. Send fewer things to the cleaners less often, and starch and iron shirts at home.

[jenbes27]

They may go after your cable, cell and recreation, they seem high. if they free up $220 per month, they get 10% of your unsecured, which would probably make them happy. But I wouldn't take anything off unless they say something.

You should compare your expense to what's allowed for in the chapter 7 and 13 forms, I think your allowed more than you claim for food, and i don't think they can't really claim you don't need the food like they can say you don't need cable.

$150 may seem low for medical depending on your insurance plan. I caluclated $150 for family of five for medical and dental and we dont have any medical problems. It depends on your deductibles, copays and if your 80% or 90%. and don't forget the dentist.

I think we may be in a similar situation, except I don't have any medical bills. We have similar debts and income. Because I want to keep my home, I don't think we will be able to pay very much to the unsecured debts, probably like 1%. Let me know how your 341 goes. I've read there are a lot of cases where you pay 0% to unsecured, but if you expenses go down, then you pay more of a percentage to the plan.

Btw - I don't think I like your lawyer. I think she's right but if you have justified expenses, why would they make you pay more than you can afford, isn't that the point of bk, because you can't afford to pay your debt? Its like they set you up to fail. I don't really care how much i have to pay to the unsecured as long as i can afford it.

I haven't filed yet, but i've read alot of course cases, you can see what other people in your area have claimed as expenses through pacer, but it costs money.

[dovette7]

The attorney filled in part of the budget, food, recreation, things like that. I gave her all the real numbers for rent, utilities, etc. I thought the food budget was low also. I average a lot more than that.

Since we already filed, what is the process of changing expenses? Do we wait until the 341 and objections? That's what the attorney said. Just wait.

On scheduales I & J. There was enough income left over to pay my secured debt and unsecured at 1%. Or at least that is what she told me. From my figures, the secured and priority debt didn't come out to as high amount as she said.

What do you think?

Car1 $27700 (no interest, term stays same)
Car2 $13700 (includes interest)
IRS $17000 (includes interest)
Comp $1100 (includes interest)
Att $2500
Unsec $22
Total: 62022

Trustee Fee ??

Total payment turned in of $1680 per month which comes out to $100,800

I dont' know what the trustee fees are but even if it was 10% With this payment, it doesn't make sense that the payment is 1% to unsecureds. Does it to you? When I asked attorney about this before, she said it was because of interest. But when checking Pacer, that doesn't make sense.
It comes out to about 27% to unsecureds unless I have no clue what I'm doing.


All of our assests are exempt per attorney.

[SinkingFast]

You can look at your Court's home web page to see what the Ch 13 Trustee's % is. Ours, in our Court here, is 8.5%.

Based on the numbers you gave, I backed the Unsecured back out and used an even $62K to figure your base monthly payment.

I got $1033.33/mo for your Secured and Priority debts.

Add an even 10% for the Trustee, $168/mo and now you're up to $1201.33/mo.

Just for nice, round numbers, that leaves roughly $480/mo to pay the remainder of your attny's fee and Unsecureds. Or a total of about $28,800 over the course of your Plan.

Let's say your residual attny's fee is $2K that will be paid in your first few payments.

That leaves approx $26,800 to be distributed amongst your Unsecureds.

If current Unsecured Debt level is a tad under $100K,........ Then you're right, you would be paying back approx 27%.

Maybe your attny is a nervous nellie. Maybe you drew a Harda$$ Trustee or the Court is under the gun to squeeze debtors. Maybe there's some sort of "secret" income guideline trigger for Ch 13 Filers like $100K+ debt triggers an investigation by the UST in Ch 7. Who knows??!!

At this point, since you've already filed, about the only thing you can do is pay your 1st Plan Payment and wait to see what the Trustee does or doesn't do.