Please critique my Schedule J

[clb24ecb1]

Hi Everyone!

I've been reading, and reading, and reading for awhile but this is my first post. I am filing Chapter 7 in WA State and a family of 7 (two huge eating 14 and 12 y.o boys and a 9, 7, 3 y.o) Our income is JUST below the median income by $1800 a year (which I'm also salty about because since my husband received two reimbursements for employee expenses in the last couple months we had to claim that as income) and our lawyer said that the trustee might want to take a more detailed look at our expenses because of it. My Type A personality added in with my anxiety has me now through the roof. I filled out our schedule J and the lawyer says it looks good, some categories a little high but that should be easily explained because of our large family. I'm wanting to make sure I have proof of everything I can.

Expense	Amount	Notes
Mortgage	$2,100	$1615 for first mortgage, $485 for second
Electric	$220
Water/Sewer/Garbage	$154
Internet	$85
Cell Phone Service	$290	Five phone lines, two phone payments
Home Maintanence	$200	yard supplies, home emergencies/appliances that need fixed or replaced, HVAC service/filters, replacement linens/towels, tree trimming, chimney sweep, plumber, fence fix
Food	$1,800	$450/wk
School Lunches	$200	4 children in school, middle schoolers always have school lunch, elementary kids 1-2 times a week
Laundry/Dry Clean	$50	Laundry detergent/stain stuff/ drier sheets
Personal Care/Household Products	$150	toilet paper, paper towels, bath/shower supplies/hygiene, cleaning supplies, feminine hygiene, etc.
Clothing	$525	$75 per person per month. Also includes coats, snow pants, boots, band clothing, baseball pants/cleats, band polo/sweatshirt etc averaged out throughout the year.
Gas	$420	Dad drives long commute every day leading to somewhat high gas cost
Auto Maintenance	$150	Includes yearly tabs, oil changes, small repairs such as headlights/air filters/ect and budget for tires and minor car repairs that may be required
Auto Insurance	$212
Life Insurance	$100	mom $47/mo, dad $300 every six month or $50/mo average
Health Insurance	$550	Health insurance, dental insurance (dadalso carries), $225/mo FSA contribution
Out of Pocket Healthcare Costs	$475	This is above the $2700/yr FSA contribution. Includes special needs meds for daughter/son @$200/mo, monthly dad/mom/oldest meds, $76 braces payment/mo, allotment for 3x year specialist trips/etc.
Pet Costs	$120	two cats/one dog. Includes food/litter/grooming (dog is standard poodle which required grooming every six-eight weeks @ $80 a visit) and small allottment for vet care
Hair Cuts	$80	1 haircut per boy every 4-6 weeks, two haircuts per year daughter/mom
Gifts	$60	Includes allotment for every child $25/gift per birthday and every child $75 budget for Christmas, little extra ($100 throughout year) for friend's birthday parties
Gym	$35
Netflix/Hulu/Disney Plus	$40
Childcare	$625	Monthly cost is average of $500/mo for 9/mo (only youngest), $1000 mo/3 months (youngest and 7 year old over summer break)
SUV	$307	Will keep
Van	$504	Will keep
Payroll Taxes	$1,100	Accounts for tax return amount of approx projected tax return of $1500/yr
Short Term Disability Dad	$25
School Stuff	$64	Backpacks ($25/kid/yr), lunchboxes ($15/kid/yr), school pics (20/kid/yr), field trips- including band trips $200/yr, PE uniforms MS kids $20/ea, ASB fees $30, school supplies approx $20/mo
Kid's Activities	$75	Includes baseball equiptment/registration fees (son 2), school sports fees (son 1 football), and son 3 theatre performance fees averaged throughout the year
Involuntary Retirement Cont. Mom	$150
Dad Licensure Fees	$14	Professional License Fees $170/yr
Other Entertainment	$50
Home Alarm System	$25
Dad 401K Loan Payment	$160
Newspaper online subscription	$12
Credit Monitoring	$20	Equifax Scorewatch, monitors dad & mom )
Total:	$11,147
Monthly Income	$10,893	$130,724 year income/12
Next Income-Expenses	($254)

^^^ Median income is $132,560

Thanks for your thoughts!

[justbroke]

As you can see, you already have a deficit in your spending. The Chapter 13 Trustee will likely question, and they're just questions, the following;

• cell phone service -- for family you must say it's for the health and welfare of the family.
• gym -- health and welfare!
• newspaper subscription, hulu, other entertainment -- generally for entertainment, keep to $50 per person in total (but it depends on the Trustee
• food -- you have $1,800 but the limits are about $1,634 for a family of 7 (based on USTP allowances over 4 persons).
• clothing -- is literally right on the money (about $521.38 for a family of 7 based on the allowances over 4 persons).

Generally I think the list is good, but it shows that even with bankruptcy, you're running a deficit of about $250/month. While I would use these numbers exactly how you have them listed, you're going need to do some belt tightening. I'm not saying to reduce those numbers as they appear up there, but manage that budget so that you can save. Even with your average refund (and assuming the Trustee doesn't take all refunds) of $1,500 or about $125/month, that's very tight.

Maybe, depending on your home's value and the balance on your first, you can strip the second mortgage. Keep in mind that the cars will be re-amortized over 5 years at about 5.25% so that value may be lower.

[clb24ecb1]

As you can see, you already have a deficit in your spending. The Chapter 13 Trustee will likely question, and they're just questions, the following;

• cell phone service -- for family you must say it's for the health and welfare of the family.
• gym -- health and welfare!
• newspaper subscription, hulu, other entertainment -- generally for entertainment, keep to $50 per person in total (but it depends on the Trustee
• food -- you have $1,800 but the limits are about $1,634 for a family of 7 (based on USTP allowances over 4 persons).
• clothing -- is literally right on the money (about $521.38 for a family of 7 based on the allowances over 4 persons).

Generally I think the list is good, but it shows that even with bankruptcy, you're running a deficit of about $250/month. While I would use these numbers exactly how you have them listed, you're going need to do some belt tightening. I'm not saying to reduce those numbers as they appear up there, but manage that budget so that you can save. Even with your average refund (and assuming the Trustee doesn't take all refunds) of $1,500 or about $125/month, that's very tight.

Maybe, depending on your home's value and the balance on your first, you can strip the second mortgage. Keep in mind that the cars will be re-amortized over 5 years at about 5.25% so that value may be lower.

Thanks for your reply!

Why would a Chapter 13 Trustee be involved if we're filing a Chapter 7 and under the median income? Our lawyer seemed to think that because we had a deficit it was a good thing.

The cell phone plan is actually about $230/mo with $60 for two iphone payments (dumb, I get it). All the kids have cheap phones because of their activities. My 9 year old walks home alone and my plan changes daily on whether I pick him up or he needs to walk. If he walks I track his phone to make sure he gets home OK. My 12 and 14 year old's have out of town band/sports and are sometimes gone even overnight. Even during sleepovers I want them to be able to have access to calling us if they're in an uncomfortable situation since I would say the majority of houses don't have home phones anymore. My 14 year old actually did this last month as he was feeling uncomfortable in a house he was at for a sleepover and called me to come get him at midnight. We can add them to our plan for $24 a month on our family plan, or spend the same amount on a pay as you go without the extra monitoring capabilities that we have with them having old iphones on our plan.

We will more than likely tighten up food. That food accounts for also things like take out during baseball season, which we use way too much (we often don't get done with games until 8pm and then just grab something on the way home... for a family of 7 that's never cheap). I'm planning on utilizing my crock pot much more often come spring and planning more quick easy dinners to be able to throw together. Not doing take out meals will probably easily save $150/mo.

If I'm including all entertainment (including NF/Hulu/Newspaper/even kid's activities) I'm at around $240/mo or $34 per person. I'm hoping that seems ok? We really really really can't give up kid activities. We'd rather eat beans and rice than give those up because the kids adore them and are all really talented.

[justbroke]

Why would a Chapter 13 Trustee be involved if we're filing a Chapter 7 and under the median income? Our lawyer seemed to think that because we had a deficit it was a good thing.

Because I didn't look at the top. Usually I see detailed expense lists for Chapter 13s. Your list is quite detailed. What I should have written, then, is that the United States Trustee (UST) may question some of the numbers. That's a big "if" because the UST would need to become "interested" in your case. There's no telling if that would happen and only your attorney will have the details on what is and isn't allowed (as expenses) in your district and in your specific case.

So, here's some additional things the UST "may" attack, in your case, if they decide that your Schedule J shows some disposable monthly income (DMI);

• All the things I wrote previously, plus;
• The median income is $132,568 for a household of 7 ($105,568 + $9,000 per person over 4 in a household). That's 105,568+(3 x 9,000) = $132,568.
• For Chapter 7's the debtor can't use any 401(k) loans or contributions as an expense;
• The UST will take the average refund, divide by 12 and add it back to your income (during their "comparative analysis");
• The vehicles will likely be less per month due to automatic re-amortization under a "hypothetical" Chapter 13;
• Your iPhone purchase installment contract would be cancelled when you file, so that payment would be added back ($60). NOTE: I don't know if any Chapter 7 Panel Trustee or the UST will catch this.
• General UST nit-picking

As I wrote, your list is impressive and very good. It certainly tells the story. I want you to be prepared because you're still a high-income filer and the UST may become "interested" in your case. The key is to have defensible numbers which you can easily and readily document. Those expenses should have been long-term and are ongoing.

Sorry about misreading the Chapter 13 thing, but some of the same rules apply, and some don't. The key is to make sure you have less than about $250/month in disposable monthly income (DMI). As expenses get chipped away, it can expose the debtor to questions and/or the UST becoming interested in the case.

[clb24ecb1]

Thanks!! Should I potentially add more to some of those categories that might be low, like the entertainment? The $1100 in taxes a month is after the $1500 refund amount, actual taxes show about $1250/mo

[justbroke]

Very cool that the refund it already calculated (many attorneys do this and the Trustees do this as well to find the "real" tax expense). I think you're going to the right path. What I did was take the USTP Means Test allowances and make sure that they aligned with my categories. For example, the Means Test allowance will show "Apparel & Services" which means clothing and cleaning of the clothing. So you have to extrapolate and not overuser a category. Additionally "miscellaneous" is very broad and includes entertainment and other "misc" expense.

I think this only becomes an issue if someone nitpicks. I can't say whether your panel Trustee or the UST would look very closely, but you never know.

[shipo]

Thanks!! Should I potentially add more to some of those categories that might be low, like the entertainment? The $1100 in taxes a month is after the $1500 refund amount, actual taxes show about $1250/mo

If your cars are pretty new, the $150 per month you listed for maintenance and licensing and such may suffice, however, if your cars are say, four years old or older, you might want to at least double that expense number.

[clb24ecb1]

If your cars are pretty new, the $150 per month you listed for maintenance and licensing and such may suffice, however, if your cars are say, four years old or older, you might want to at least double that expense number.

Thanks for that! One of our cars is a 2006 Sequoia with 134k miles... I'm anticipating a big repair might be needed soon with that. ugh. The other is a 2012 Sienna minivan with 73k miles but we have a warranty until 100k miles.

I can definitely see us needing more than $150, especially with the SUV, but I'm really worried about putting numbers down that immediately pique extra inquest. I want to fly under the radar!

We also have student loans that begin to come due again in May in the amount of approx $400-$500/mo, but by that time my husband will have also gotten a cost of living raise of 3% where we will then be even closer, if not even a little over, the median income, depending on if he also gets a grade increase at work with that increase (we literally don't know if it's going to happen until we get the paycheck).

[clb24ecb1]

Very cool that the refund it already calculated (many attorneys do this and the Trustees do this as well to find the "real" tax expense). I think you're going to the right path. What I did was take the USTP Means Test allowances and make sure that they aligned with my categories. For example, the Means Test allowance will show "Apparel & Services" which means clothing and cleaning of the clothing. So you have to extrapolate and not overuser a category. Additionally "miscellaneous" is very broad and includes entertainment and other "misc" expense.

I think this only becomes an issue if someone nitpicks. I can't say whether your panel Trustee or the UST would look very closely, but you never know.

Thanks!

When I looked at the food/clothing/household supplies it looked like I still should be under the total amount allotted, even with the additional food expense, thoughts?

Food: $1800
School Lunches: $200
Laundry/Dry Clean: $50
Personal Care Items: $150
Haircuts: $80
Clothing: $525

Total: $2805

Allotment from that category on the trustee website for a family of 7 is $3046.

I really appreciate your opinions!

[shipo]

Thanks for that! One of our cars is a 2006 Sequoia with 134k miles... I'm anticipating a big repair might be needed soon with that. ugh. The other is a 2012 Sienna minivan with 73k miles but we have a warranty until 100k miles.

I can definitely see us needing more than $150, especially with the SUV, but I'm really worried about putting numbers down that immediately pique extra inquest. I want to fly under the radar!

In 2015 I entered my Chapter 13 with a 14 year old Honda Accord with roughly 150,000 miles on the clock. Over the next three and a half years the car needed (and got) about $5,000 in maintenance (which includes tires, brakes, timing belt, sensors...), however, by that 3.5 year mark, the car needed a whole host of other maintenance due to corrosion, to the tune of another $3,000; that's when I sent the old girl to a local auto salvage yard. Had I spent the $3,000 the car would probably have survived the full five years of my Chapter 13 with maybe another $1,000 in maintenance (tires and such). So, 60 months, $9,000 in expenses and licensing and such, that works out to $150 per month for ONE car; given you have two, I think you can pretty safely argue at least $200 per month, if not $300.

[clb24ecb1]

I didn’t even think of brakes, which both will need soon, sigh. Luckily new tires were bought for both within the last year. Even when both vehicles get oil changes (let’s say 3 times a year) that’s $150 a pop right there. Licensing at $150 or so for both. You’re right I probably could very legitimately up the cost to at least $200.

[clb24ecb1]

On that note- I’m guessing home maintenance might be the same? Up a little? Right now we have to have our tree trimmed ASAP away from our house (was supposed to be done by Dec), that will be about $400, our fence needs fixed because it’s literally falling down in some places (we’d do it ourselves but we need money for supplies), probably $300, our HVAC system needs to be serviced this year, $200, chimney sweep yearly $150, last year our sprinkler popped a leak under our concrete patio Causing a huge runoff and that will need to be fixed in the spring, God only knows what that will be... last month our three year old threw something down the toilet and we had to replace the whole thing, $200.

That doesn’t even include normal home things like air filters and lightbulbs and fixing random things around the house (that seem to be CONSTANT)

[flashoflight]

I think you will get into a 7, albeit you and your lawyer will have to work a little bit for it by moving some of your numbers around. As a borderline filer, you will likely catch extra scrutiny. Get those receipts ready to turn in to back your numbers.

My guess is that the trustee will want bills/receipts documenting the last several months worth for fuel, utilities, cell phone, pets, home maintenance, childcare, all insurance, and all loan payments. Especially the fuel.

You don't need an allowance for vet visits. You need to produce receipts for the vet. If you didn't go to the vet, why would you all of a sudden start going to the vet post petition? The same for home maintenance.

The trustee will likely not want receipts for food and auto maintenance as long as the amounts are reasonable. With the age of the vehicles, I would not be concerned with doubling the expenses. They don't have time to check every little thing.

Your food is too high at $2k (why are you separating school lunch? food is food). You must not exceed the USTP recommended amounts. This is the one area where they are inflexible without medical documentation. Just lower it to the USTP max and forget about trying to get more. If you ended up in a 13, you won't be eating out much. That's just the way it is.

The 401k loan payment won't be allowed, so just remove it. Your lawyer should have told you already it's not allowed in a 7.

The gym, kids activities, home alarm, and credit monitoring are highly suspect and may not be allowed.

You don't need to worry about piquing the interest of the trustee about any reasonable expense necessary for the welfare of your family. If you send in the receipts with your ch7 petition to document the expense, it will be fine.

[clb24ecb1]

I think you will get into a 7, albeit you and your lawyer will have to work a little bit for it by moving some of your numbers around. As a borderline filer, you will likely catch extra scrutiny. Get those receipts ready to turn in to back your numbers.

My guess is that the trustee will want bills/receipts documenting the last several months worth for fuel, utilities, cell phone, pets, home maintenance, childcare, all insurance, and all loan payments. Especially the fuel.

You don't need an allowance for vet visits. You need to produce receipts for the vet. If you didn't go to the vet, why would you all of a sudden start going to the vet post petition? The same for home maintenance.

The trustee will likely not want receipts for food and auto maintenance as long as the amounts are reasonable. With the age of the vehicles, I would not be concerned with doubling the expenses. They don't have time to check every little thing.

Your food is too high at $2k (why are you separating school lunch? food is food). You must not exceed the USTP recommended amounts. This is the one area where they are inflexible without medical documentation. Just lower it to the USTP max and forget about trying to get more. If you ended up in a 13, you won't be eating out much. That's just the way it is.

The 401k loan payment won't be allowed, so just remove it. Your lawyer should have told you already it's not allowed in a 7.

The gym, kids activities, home alarm, and credit monitoring are highly suspect and may not be allowed.

You don't need to worry about piquing the interest of the trustee about any reasonable expense necessary for the welfare of your family. If you send in the receipts with your ch7 petition to document the expense, it will be fine.

For utilities I literally took all of the bills for the last 12 months added them up and divided by 12. If they want to see the last few months they'll be even higher so that's fine with me! Cell phone, easy. Pets, should be easy because I'll just get a run off on my account from my vet for the last year and I have receipts for the dog grooming. Childcare also easy. Insurance payments are easy and now I kind of regret shopping around and cutting out $100 of insurance last month.

Home maintenance is hard because there's stuff we haven't done, but NEED to do, because we haven't had the money. I mean we have documents for probably air filters, all the toilet replacement stuff we did last month, chimney sweep from December.

My lawyer is actually the one who actually said the 401k loan counted because it was an involuntary deduction.

I have no problem lowering food costs. This is the info I was hoping to get from my lawyer, an actual spell out of what "looked a little high" because then I can move it around other places.

I'll have to comb through my bank account records to check on fuel. It might not be questioned by the trustee though because my husband works for the biggest employer in our area which is 45 minutes outside of town for all the workers. It's well known that those employees drive a lot to work every day. We each go through about a tank of gas a week.

[clb24ecb1]

It’s interesting to see some people say things like kids activities are totally ok and then others say highly suspect. It seems like you really don’t know what you’re going to get in the end sometimes!