Means Test and Budget Question

[Amanda]

We are trying to file a Chapter 7 with our lawyer this week. We are going over our monthly budget for the Means test, but we make about $20k UNDER the median income for the means test. We have a family of 4 and we are trying to adjust the budget so that we come out with a $0 disposable income. How imparitive is it to have $0 as the bottom line number on the budget if your income is below the median income level?

I have tried to research what is a legitimate budget for a family of 4 (in GA). So far our budget looks like this:

Rent - 405
Utilities - 210
Water - 40
Phone - 150
Food - 873.29
Clothing - 125
Laundry - 50
Medical - 100
Transportation - 350
Auto Ins - 137.52
Auto Tag - 25
Auto Payment - 399 (we are trying to keep the car)
Childcare - 495
School Lunch - 40
Haircuts - 65

This would bring us to $0 disposable income. Does this seem like a reasonable budget for a family of 4?

[optimistic1]

Who suggested that you come up with exactly zero?

[LSUTiger32]

Seems very reasonable to me with the exception of food. That's a lot of money for a family of 4. I think the standard IRS allowance is $200 each person because mine was $800 on my schedule. So you are a little over there. You shouldn't be spending anywhere near that though.

We spend about $600-700 a month which includes eating out twice a week.

[Amanda]

Our lawyer's assistant told us we have to come up with $0 disposable or the Trustee will want the disposable to go to creditors. From what I've found online, which I'm only 25 and have no clue about all this (hence the lawyer), but we should be able to have under $100 disposable a month and pass the test.

[Amanda]

Seems very reasonable to me with the exception of food. That's a lot of money for a family of 4. I think the standard IRS allowance is $200 each person because mine was $800 on my schedule. So you are a little over there. You shouldn't be spending anywhere near that though.

We spend about $600-700 a month which includes eating out twice a week.

From what I've found online the average for a family of 4 is $770, which is what we originally had on the budget, but since we have to come up with a $0 disposable the lawyer's assistant added some to it. I didn't tell her to add that much to the food, but I did suggest a 'household items' expense for diapers, wipes, paper towels, etc., so I guess she added it onto the food expense.

Oh, forgot to add:

We don't spend that much on food a month, but I'm not sure where else to add the disposable to make us come out with a $0. I think all this has me more stressed out than I was before we retained the lawyer!

[JoeBankrupt33]

I think that exactly zero looks funny. On mine, I was -32.

I think your numbers look pretty good, but I am amazed at how low the rent is. For our 6 person family in CO, we had $1300 in food, but that was split between two schedule J's because my wife and I were separated, so it may have gone under the radar. We also listed cable, internet, and my exes gym membership. For recreation, we also included soccer for two of my kids.

[Amanda]

I think that exactly zero looks funny. On mine, I was -32.

I think your numbers look pretty good, but I am amazed at how low the rent is. For our 6 person family in CO, we had $1300 in food, but that was split between two schedule J's because my wife and I were separated, so it may have gone under the radar. We also listed cable, internet, and my exes gym membership. For recreation, we also included soccer for two of my kids.

We are lucky on the rent part. Really and truely the average rent around here runs about $650 for a 2 bedroom. We really need a 3 bedroom, but since the children are so young, they are sharing a room until we start bringing in more money to be sure we won't get behind on anything. The housing we're in is an old mill village and the rent amounts are really low. Our lawyer told us not to put any recreational expenses or an expense for habits. This is causing us to try to put $ elsewhere in the budget. Like I told my lawyer, my daughter always seems to have some kind of school activity, we have a annual formal dinner party for my husband's company that we attend (pretty much mandatory if you want to 'climb the ladder'), and then my husband smokes, but she said that a Trustee will say pay your debts before habits or entertainment. So, this has me stressing that we will have to go with a Chapter 13. The main reason we are filing is because we had a foreclosure last year through the USDA. They sold the house and is now garnishing my husband's pay for the $60k difference we owe from the sell of the house. We can't possibly pay that. Granted, we do have other debt, but not very much. If it were not for the house, we would gladly go for a Chapter 13 or even pay off our debt by ourselves.

[leena]

Coming so far below the median, I think it is doubtful the trustee is going to worry much about your food costs. I would also question the idea that you need to be at exactly 0. People are at 105 disposable income a month (or even more if they pass part two of the means debts which has to do with a debt-to-disposible income ratio) and still get 7's. Of course, you may be in a district with tough trustees. Here in MN, my attorney's office asks specifically about entertainment expense, and even ciggarettes (but I do not smoke).

Good luck, I think you will be just fine.