Food Clothing national standards?!?

[happy_ira]

Check out this link: http://www.usdoj.gov/ust/eo/bapcpa/2..._standards.htm

[justbroke]

WTF? What is that 5% thing? Obviously Four people can not survive on $50 per month for food and clothing, so I must be reading something wrong. What does the 5% get used for???

(I have the same exact for four people, $1,370.) So, for a family of 4 you get a $1,370.00 allowance. The 5% thing is if you actually exceed the national standard, how much you can go over. So don't be afraid. Most people don't try to get the extra 5% and get only the $1,370 (for the four person family).

It's used on line 44 of the B22C Form... if you have to use the form to determine your disposable income (your income is below the State's medium income).

Additional food and clothing expense. Enter the total average monthly amount by which your food and clothing expenses exceed the combined allowances for food and clothing (apparel and services) in the IRS National Standards, not to exceed 5% of those combined allowances. (This information is available at www.usdoj.gov/ust/ or from the clerk of the bankruptcy court.) You must demonstrate that the additional amount claimed is reasonable and necessary.

The key word there is the "demonstrate " part. It's not a "red flag" for the Trustee, but they do watch what people put there. You have to reasonably exceed the guidelines and be able to explain and document the reason. Maybe you need special food, or special clothing???

You have no worries if you don't have food and clothing expenses over $1,370 a month.

[happy_ira]

You have no worries if you don't have food and clothing expenses over $1,370 a month.

Well, interesting. I am NOT over on my Form 22A for the Means Test. On that form I merely picked up the National/Local standard without any additional allowances for all those categories. I did not want to raise any Red or Yellow flags in that section.

HOWEVER, on my Schedule J, I listed my expenses a bit more precisely which meant I went over the national Food allowance by quite a bit (with good reason due to where I live (well above average prices in NYC!), dietary restrictions and a disabled child with special food needs). On the other hand, there is not National Standard for the Schedule J, yes?

Any thoughts?

[justbroke]

Well, interesting. I am NOT over on my Form 22A for the Means Test. On that form I merely picked up the National/Local standard without any additional allowances for all those categories. I did not want to raise any Red or Yellow flags in that section.

HOWEVER, on my Schedule J, I listed my expenses a bit more precisely which meant I went over the national Food allowance by quite a bit (with good reason due to where I live (well above average prices in NYC!), dietary restrictions and a disabled child with special food needs). On the other hand, there is not National Standard for the Schedule J, yes?

Any thoughts?

No, you don't have to use the National Standards for Schedule J, but you could use the Standards as a guideline to determine if the Trustee is going to mess with you!

There have been many cases where debtors used the National Standards on J when they passed the means test. Trustees have complained and it has been met with varying results.

Example, some folks have used the Car ownership and Car Operation costs from the Standards on Schedule J, and the Trustees have balked at that. Saying that the expenses on Schedule J have to be "actual" expenses. Makes sense.

So long as they are actual expenses on Schedule J, you have no problems. Just have to defend them with "proof" (receipts, tax filings, bills, etc).

I'd also like to add that if you have a real expensive car payment (over the National Standard), then the Trustee will balk at that too. They are not going to let you keep a car payment of... $700/month.

Good luck!

[happy_ira]

So long as they are actual expenses on Schedule J, you have no problems. Just have to defend them with "proof" (receipts, tax filings, bills, etc). Good luck!

Well, I have some receipts, but my family's groceries and food is over $2,000 per month. Impossible to save every receipt, esp since we spend cash oftentimes.

[lrprn]

Well, I have some receipts, but my family's groceries and food is over $2,000 per month. Impossible to save every receipt, esp since we spend cash oftentimes.

How big is your family? $2K/month for groceries and food is high unless you have a very large family.

And even with cash, you can still get receipts, even if you are buying from a roadside vendor. Maybe you haven't been saving them, but you can always start now.

If you file with an amount significantly above what's allowed, your trustee may ask you to prove you have been actually paying that amount by producing receipts. "I don't save receipts" just isn't going to cut it.

[happy_ira]

How big is your family? $2K/month for groceries and food is high unless you have a very large family.

Let me say that I really appreciate the responses and questions/inquiries here as it helps me prepare and think through the thought process and calculations I did, so please comment if you think it is a weak and thin argument:

My family size is 7 people whom I claim in my tax return, including a very young disabled child who has developmental issues and requires special food and formula. Additionally, I have one son from a prior marriage who comes once a week (growing boys--teenager--are *very* hungry) and a childcare worker for the disabled child, for whom we provide breakfast and lunch and late snack/coffee/etc.

Regardless of my older son and childcare worker, we spend approx $2400 per month on food. This works out to $2400/7 = ~$300 per person, or $10 per day. In turn, this is about $3 per meal (three meals per day) per person. Of course, we all know things cost more than that. For instance, the disabled child's special formula costs $30 per cannister which she goes through 2 per week, so $240 per month just for that on top of her other baby food (do you folks realize how much a tiny jar of baby food costs! Yipes!!!). Then you have the fact we are in NYC with high prices. We eat mostly kosher products, which is +25% higher. (The Trustee will not be alarmed at this last fact as he will be intimately familiar with higher kosher prices where I live.)

What else? Oh--I work in Manhattan, which has *outrageous* prices for lunch and breakfast. I'm not even talking about fancy dining. A simple tune fish sandwich, a coke and a bag of potato chips is $12. (Based on above, I would only have enough $$ allocated to me for one meal!?)

Anyway, you get the idea. Spending $2400 is actually not a lot, in my opinion, for my family of 7 (plus a few extras) where I live. It's all the honest truth, and I think I can succinctly sum this all up if the Trustee asks at the 341.

Bear in mind one last point, none of this was factored into the Form 22A; for that Form 22A on line 19A I entered the amouny per Natl Standard for Food+Clothing which is a whopping $2150 (not at all that far from my $2400). I merely picked up the National Standard, so that should not be a flag at all I would think. I only wrote in this actual higher (by a mere $250 on top of $2150--but bear in mind an 5% "allowance") amount of $2400 on Sched J (actually, technically $2450 when combined with Clothing). So perhaps it wont show up as a major issue??

Now--where am I 'off'? Please let me know any issues you see.

Any thoughts? Thank you.

[No Gravy]

Additionally, I have one son from a prior marriage who comes once a week (growing boys--teenager--are *very* hungry)

Well now...there's your problem right there...

Seriously, providing documentation on all this will be the key. If you fall outside the average, then they're just going to want proof as to why. You have all the reasons (and then some!) why you may spend more than the national average, you'll just need to show documentation as to why.

It may be a pain, but start saving receipts and keeping track of expenditures. It can be as simple as an Excel spreadsheet. Start creating a paper trail. I doubt, with all the special circumstances you listed, that it will be a problem, but it's always better to be as prepared as possible to prove your claim(s).

[justbroke]

Now--where am I 'off'? Please let me know any issues you see.

Any thoughts? Thank you.

You are fine. I would put WHATEVER you are ENTITLED to on the form. There is an area where you can put "additional costs" on the form as well. Make sure you include any needs for your disabled child!

The Bankruptcy Code is not about punishing you, it's about giving you a fresh start, and certainly not about not providing for children and especially the disabled (as there are places to include special needs and care for the disabled on the form).

That's a big family. (Actually I grew up in a family of 8, but the average family-size amongst relatives on my Dad's side was 11. Yeah... 275 first cousins!)

[happy_ira]

Well now...there's your problem right there...

Seriously, providing documentation on all this will be the key. If you fall outside the average, then they're just going to want proof as to why. You have all the reasons (and then some!) why you may spend more than the national average, you'll just need to show documentation as to why.

It may be a pain, but start saving receipts and keeping track of expenditures. It can be as simple as an Excel spreadsheet. Start creating a paper trail. I doubt, with all the special circumstances you listed, that it will be a problem, but it's always better to be as prepared as possible to prove your claim(s).

Receipts will be a royal pain, but i'm going to try beginnning now (though my 341 is two weeks away, so i obviosuly wont have them by then). I can certainly workup an excel sheet for the past few months... so two follow-up questions:

1. If if if the Trustee asks for detail, isthis something he'll ask for during the 341 and it will be OK for me to send it in? Or do I have to come back to face Trustee and explain it all?
   
2. Or will it be better for me to have the Excel detail spreadsheet on the spot at the very first 341 mtg for the trystee?

Again, I am *not* above the average on the Means test (form 22A), just a bit high on Sched J. Thanks.

[justbroke]

If if if the Trustee asks for detail, isthis something he'll ask for during the 341 and it will be OK for me to send it in? Or do I have to come back to face Trustee and explain it all?

If it's an issue, they usually will let your lawyer know 7 days before the meeting. I haven't had any questions on mine, and I claimed some bizarre things which were outside the National Standards! They aren't trying to ambush you. Sometimes, at the 341 table, they'll just ask to have you submit some additional information (mail it in).

Or will it be better for me to have the Excel detail spreadsheet on the spot at the very first 341 mtg for the trystee?

Some say don't bring anything with you -- other than ID and proof of SSN. I brought everything that I had sent them (tax returns, schedules, plan, etc.). They didn't ask for it, but did ask a prior debtor for their tax returns; at the point, their lawyer handed them right over.

Being prepared just means that things aren't delayed or postponed. Being able to produce documentation on demand, I think, is good. Consult your attorney on what they would like to do. Maybe give a copy to your attorney before the meeting and they'll put it in your file.

[No Gravy]

Receipts will be a royal pain,

They get easier after a few months
I always saved my receipts to match up with statements (CC and checking), then tossed them. In June I just stopped the tossing them part, and instead made a very simple Excel sheet, with very simple categories of expenses. Create a simple system that you can follow through with, and it's not that big of a deal. I promise

On your questions, I think it would be better for one of the "heavy weights" (old timers, mods) to answer, or someone who's had direct experience with being asked to prove expenses. There's a stickie post on expenses that might also be helpful.

I can say in all things that deal with the government, to be forewarned is to be forearmed, and the more prepared you can be with documentation of expenses and anything else can only help your case.