Expenses

[eich74]

My cell phone bill is in my mother's name, but I pay in in full every month to T-Mobile directly.

2 questions...

1. Do I list this as an expense of mine.
2. The amount every month is around $368. Is this considered an insider payment if I cant claim as my expense? How would the trustee get the money back since it didn't go directly to her or is this a non issue?

[justbroke]

Yes, you can list it as an expense since you pay it. However, most bankruptcy Trustees don't allow more than $100 or so for communications. That amount, $368/month, seems excessive, and will likely be questioned.

Generally speaking, though, the Means Test has a line for communications, but adding money there usually requires documentation. If you documented a $368/month cellular bill, the Trustee will question the amount and maybe try to get you to reduce or remove the amount. This is because, generally, telecommunication expense is already included in the "non-rent" (non-mortgage) expense allowance.

Reducing that amount could lead to a debtor now being able to fund a Chapter 13. If you are planning to file Pro Se (on your own), and your "disposable monthly income" (DMI) is a positive number, the adjustment of this expense on the Means Test could cause some issues.

Here are the general guidelines used by Chapter 7 Panel Trustees when evaluating. your forms and expenses. While this is from just before the forms changed, you can get the general idea... STATEMENT OF THE U.S. TRUSTEE PROGRAM’S POSITION ON LEGAL ISSUES ARISING UNDER THE CHAPTER 7 MEANS TEST

URL: https://www.justice.gov/sites/defaul...ne_by_line.pdf

[eich74]

I should have mentioned that we are a family of 5. The bill is for 5 phone lines, 3 tablet lines and 5 phones being leased, which is why is it is $368. I am using an attorney to file.

[justbroke]

A Trustee could poke at "3 tablet lines" easily. I can't say whether the assigned Chapter 7 Panel Trustee would do that For the phone lines you need to be able to articulate that it's for the production of income or for the health and safety of family. But, I can tell you that excessive telecommunication expense is an easy target for a Trustee. If you are under-the-median it may not be an issue at all. Your attorney may or may not say anything about it. Telecommunication expense is already in the non-mortgage/non-rent allowance.

(Looks like non-mortgage/non-rent allowance for Colorado -- across all counties -- ranges from $620 to about $750 for a family of five. That expense category includes homeowner's/renter's insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone, cell phone, internet, and cable. Going outside those allowances typically requires documentation and a very good reason.)

Your attorney may nor may not use the line, on the means test, to include "extra" telecommunication expense. Your attorney will likely include a line-item expense for this on Schedule J (expenses). Since you're filing with an attorney, they'll try to come up with the better solution for you, to avoid scrutiny or questioning.

I'm sure your attorney will figure out how to proceed. I was questioned over putting $150 on the "extra" telecommunication expense, but mine was for my "work-at-home" internet (really high speed). My reason, that I communicated to the Trustee, was that I work at home 50% of the time and it earns my income. I still had to reduce it to $100 (on the forms) to appease the Trustee. Additionally, I didn't mention my $450/month cellular phone bill. If I had put $600 on that line ($150 for internet and $450 for cellular), there would likely have been a more serious conversation about my expenses.

Today, more people have cellular phones than landline phones so I would expect the Trustee to be okay with cellular phones for the family. I don't know what is "reasonable" these days. As I wrote, my cellular bill is still over $450/month.

C'est la vie.

[eich74]

Thanks for the info and break down. I come in about 20k under median for our family size. Will definitely touch base with my attorney.

[justbroke]

If you're under, it will likely not be an issue. You likely have other expenses that would clearly keep the Trustee at bay.