schedule I/J wiggle room and debt payments

[mtbc]

We are filing in MA and we come comfortably under the B22A means test. However, with Schedules I and J, how much wiggle room do I have in terms of monthly net income to remain comfortably within chapter 7 expectations, without fear of some motion to move us to 13?

I'm listing things as entertainment at $150 or so (including cable TV). Is that okay for a family of four?

With absolutely current expenses I have several hundred dollars disposable income. I suppose this is what I get for working to reduce our household expenses over recent months! (Moving to a cheaper apartment, switching to a cheaper cellphone plan, etc.)

However, when I include debts I expect to pay on soon (more IRS debt from our forthcoming 2009 filing, 2008 state taxes I still owe that I have no installment agreement for yet), it drops to a few hundred. When I include payments on unsecured debts that I plan to reaffirm (a foreign CC debt I want to pay off so it's not waiting for credit collection in their courts if I try to work in that country again, and a loan from a family member), my disposable income drops to $30.

There is also the fact that in January I'll be probably losing my job (my employer runs out of income then, most employees are already notified of redundancy) and in this economy it's not as if I'll probably be earning as much in the new year once I find a new job.

So, my question is: will they take good account of my answer to J.19, expected changes -- i.e. that I have already-incurred debts that payments will be starting for, and further debts I'm reaffirming -- and then be okay? To what extent does that really ameliorate a too-high answer to J.20c -- monthly net income?

A secondary issue is: would my use of payments to unsecured creditors (who I plan to reaffirm) as part of my schedule J expenses be okay? Or is that seen as some kind of preference given that, without it, I suppose that money could be split among all other creditors? They're not ridiculously high -- payments of $250/month which I've been making previously (except recently, fear of preference within 90 days) on CC debt of around $8,000, and payments of $150/month to my mother-in-law who loaned $1,500 to my wife without telling me and expected the money back already! The only reason we didn't already start paying her back was fear of insider preference.

Or do I have to go and look harder at our expenses and dig up all the little things that can add together? (AAA membership, the $100 I just paid for driver license renewal, infrequent childcare, etc.)

[readytofile]

Ok let's see here. Our cable/internet/phone bill was put separately from our entertainment expenses. Our lawyer listed like $350 for entertainment expenses for a family of 5 and the Trustee didn't even blink an eye at it. I understand that you are living on a reduced lifestyle. That's how we were too. Now though, we plan on buying more groceries so our grocery amount is higher, etc. Make sure you add everything. I'm sure if you look at it closely you can come up with enough expenses to close the gap. When it was all said and done we had down a negative of $11 a month

[klandsb]

After reading your post the only thing that really stands out for me is your mother in laws pmts each mth... When I started this a few mths ago I was going to include my ex-husband who I pay $100 a mth too for payback from a car we bought my daughter . Then the deeper and more knowledgable I got I realized that all the pmts I made to him can be taken from him by the trustee... Not sure where I read that but its in the threads under preferential pmts somewhere..Do a little digging in the threads on here and u will find great information. The last thing I want is my ex involved in my bankruptcy so I excluded him from the filing.

[ChaseDidThis]

I believe you must list all creditors on your petition, and I don't think you can pick and choose which debts you want discharged. All unsecured creditors must be treated equally.

I think you need to look at your expenses again, once you go "Cash Only" there's a lot of things you need that you used to just put on a CC. Think food, personal hygiene, clothing, doctor visits, prescriptions, pet care, Cable, Internet, Gas, Stamps, vehicle registrations, etc.. you get the idea. Go thru the past 6 months CC Bills and Checkbook and list everything you purchased, I think you will be amazed at how much money you DON'T HAVE LEFT at the end of every month.

I think you should list payments to the IRS as they can not be discharged, but I would not list Credit Card debt that you want to reaffirm. After you have your Fresh Start, you can always choose to just pay back your MIL and that old CC.

[HakunaMatata]

I'd continue to dig (license renewal, AAA, tires, haircuts, dry cleaning, reasonable gifts, etc). I'd also separate cable from entertainment as cable is a billed expense. As ChaseDidThis mentions, unsecured creditors must be treated equally. The Trustee isn't going to react favorably to your reasoning for paying an unsecured foreign credit card or your MIL. Debt is debt. Unsecured is unsecured. (However, you have the option to repay creditors post-BK). I'm sure you can find missing expenses. Have you compared your numbers to federal guidelines?

[StartingOver08]

Also look at anything you pay annually and divide by 12 to get the monthly cost. You may be surprised at what you are actually spending. Yes, the AAA membership and drivers lic renewals are perfect examples. You may want to compare your budget with the IRS standards look at this US Trustee site to get to the various links for allowed expenses (scroll all the way down to see each link for each catagory): http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

Any payments made to family, friends or business partners is considered insider payments and the Trustee can go after them for the payment. In fact, they usually will go after them for the payment. Search under "insider payment" for recent examples.

Reaffirming unsecured creditors is just not done, according to my attorney (I asked too when I filed). You naturally can pay anyone you choose after your discharge on a voluntary basis without jeopardizing your bankruptcy discharge.

As one of the others posted, you do have to list each all creditors and all of your debt and all of your assets. The IRS is considered priority debt. You can make a separate payment arrangement with the IRS for repayment, but that arrangement will be terminated when you file Ch 7. After your discharge, you would need to contact the IRS to get a new installment agreement for the IRS debt.

[music12]

the issue with your foreign debt is an interesting one and i think you would have to look up caselaw about it. clearly a US bk has no jurisdiction over those creditors so your debt to them won't be discharged. however, the US bk court would probably want to assume that you are bankrupt, period, which means they would expect you to also file bk in the foreign country. so unless bk in the foreign country is not a legal possibility, i don't think you should rely on payments to a foreign creditors as expenses to do a 7. i would do everything so that including that "expense" is not necessary in your petition.

[mtbc]

Okay, thank you all -- looks like I should just rely on dropping the unsecured payments from schedule J then and hunt harder for other expenses.

[mtbc]

Interestingly, chapter 15 here makes it easy for foreign creditors to take part in my bankruptcy case, should they so choose. I'll be interested to see what the court clerk makes of overseas addresses on the creditor matrix. I doubt it'll make any difference, but I'd rather like to draw them into the proceeding if possible, because if they start behaving like they recognize that the US bankruptcy judge has any authority then, by my reading of precedents in recent years, it's then easier for me at some later date in their country to argue that the debt has been discharged.

[music12]

very interesting! what's in chapter 15?
but, remember that creditors with a foreign address can get more time to object if they want, so make sure to balance the need to discharge this debt with the extra time it might take.
i do agree that if they somehow submit to jurisdiction, that might work in your favor. however, the courts in the foreign country will not be required to rule that way. so you never know.

[mtbc]

There's a fair bit of case law in English-like-law jurisdictions over the past century where domestic creditors who participated in foreign proceedings often end up having to recognize foreign discharges. Unfortunately, most of what I can see in recent years is about corporate, not individual, transnational bankruptcy, although one imagines that many of the same principles apply. So, in short, there's evidence that it could work, but it's far from sure. An interesting read on this kind of thing is Jay Lawrence Westbrook's "Chapter 15 and Discharge", 13 Am. Bankr. Inst. L. Rev. 503 (2005). (Chapter 15's our version of the UN transnational bankruptcy model law thingum that makes it easy for foreign trustees and creditors to get help from foreign courts in wrapping the transnational case up into one big ball. But if you Google for "chapter 15 discharge" you'll get military stuff instead!)

[music12]

fascinating! and thanks for the reference.

now, clearly if that's what you are going to argue, you'd better not include payments to the foreign creditor in your projected expenses, because the foreign creditor could use that to say that it was you who didn't think this debt was getting discharged!

[mtbc]

Heh, true enough. It's a change of tack prompted by the consensus that I shouldn't try including payments to them on my schedule J anyway!

[music12]

btw, it sounds like you know quite a bit about the whole process - or did you just learn it all between your first post early this morning and now??

[mtbc]

On those matters I have lots of partial knowledge and general impressions but little that anybody should take to the bank. (-: I pick up some stuff through also being on some other bankruptcy forums for other countries.

I tend to start reading about things long before I'm going to have to really do them! (I started the reading for this bankruptcy two or three years ago, so if the trustee does look really closely at my history they'll still fail to find anything damning.) So I've now long since got rid of most of the tiny debts, anything secured, business ownerships, etc., to make my case as simple as I possibly can. Also (with the exception of the US tax code!) a lot of the laws and the judges' rulings are actually quite readable. What I'm often missing, though, is how real people's cases go, which is why I love this forum, people's 341 reports, etc. I think I've probably orchestrated my life for a while now fairly well from a technical point of view with respect to my imminent filing, but I'm certainly still learning about the reality of how things tend to go.

It was the same when I've handled our own immigration and naturalization work for our family -- seeing people's reports about how things went for them at the airport or immigration office or whatever, how it tends to go, what can happen. Reading ahead helped a lot there, too: for things like knowing to register for selective service, because sometime later they'll ask you if you did. A lot of these legal things, it can really help to start to prepare way in advance.