Ch. 7 Expenses - Actual v. IRS or Local Allowable

[ApresMoi]

I have read through the stickie on expenses and still need help with Schedule J.

I have read attorney blogs and some say list your 'actual' expenses. Other blogs say list what you would like to be spending now that you are not paying your CCs. Others say to look at the IRS national allowables. Others say look at your regional or local allowable expenses.

If I were to file pro se, this is the one area that seems to me to be a) very important and b) unclear. Yes, I can come up with my actual expenses easily enough, but that does not include health insurance that I would like to get (and that I do not now have), renter's insurance that I do not currently have, and some other expenses that have been put off because I was making high CC payments.

Can someone please offer me some clear guidelines? I would like to do a Schedule J workup and just do not know where to begin (other than using actual expenses as a starting point). Also, what period do I need to look at? If it's the previous six months and I file in January, I would look at six months up to 12/31, correct? If so, that does not give me a lot of time to research and buy health insurance, etc. (if it has to be an 'actual' expense at the time I file).

Thanks for any comments/suggestions.

[justbroke]

Can someone please offer me some clear guidelines?

The guidelines are, unfortunately, District specific. As you learned, some Districts/Trustees want actual, some want what your future expense will be and others want the IRS allowances.

Generally speaking, if you're over the median income, you use the IRS Allowances or actual (whichever is less). If under the median income, you use your actual (and hope it doesn't exceed the IRS allowance). Some Districts/Trustees publish a guide to what expenses are "allowed" in that District. I actually hate that they do it because those Districts/Trustees usually have amounts much lower than the IRS allowance!

I would like to do a Schedule J workup and just do not know where to begin (other than using actual expenses as a starting point). Also, what period do I need to look at? If it's the previous six months and I file in January, I would look at six months up to 12/31, correct? If so, that does not give me a lot of time to research and buy health insurance, etc. (if it has to be an 'actual' expense at the time I file).

This is the issue with filing pro se and that's not knowing local custom. Your first thing should be to peruse the District's and the Trustee's website to find all information that you can. As I wrote, some Trustees publish information on the expenses (expense guidelines), and expect all to use them. The lookback is always the 6 calendar months ending the month prior to filing. So yes, if you file January 1, the lookback is July 2009 to December 2009.

Do you at least have a guidebook like the NoLo Chapter 7 book? Many of these questions are answered therein.

[mtbc]

Good question. I don't know the answer. My impression has been, that it's your expected reasonable expenses, with arguments for "reasonable" being enormously strengthened by (a) not being wildly worse than IRS guidelines and (b) precedent in your past spending. For instance, I included a professional subscription and some textbook costs in my "other" that I have in fact been paying for the past few years, and I bumped a couple of other categories up a bit from recent history if I could reasonably argue that I've been painfully underspending (e.g., we are now overdue for various medical checkups, and our (exempted) car's well overdue for various maintenance) and we still remained under the IRS guidelines anyway. I only bumped above IRS guidelines for things I felt I had documentary proof of somehow being exceptional for (e.g., medical, given our diagnoses and past bills). For things like charitable contributions, that I'd normally just give cash for on impulse and not take a receipt for, I low-balled them fairly heavily through not really having much documentary evidence behind my claim. So, that's the take I ended up with, anyway, but, yes, I didn't really see a whole lot of guidance about schedule J given how very important it is, perhaps because such advice really does look like legal advice one needs a law license for!

(I couldn't find any advice from our district -- MA -- on these things.)

[ApresMoi]

pro se and that's not knowing local custom. Your first thing should be to peruse the District's and the Trustee's website to find all information that you can. As I wrote, some Trustees publish information on the expenses (expense guidelines), and expect all to use them. The lookback is always the 6 calendar months ending the month prior to filing. So yes, if you file January 1, the lookback is July 2009 to December 2009.

Do you at least have a guidebook like the NoLo Chapter 7 book? Many of these questions are answered therein.

********

Well, I did have the French phrase in mind at the time I chose that handle. Heh. Then I looked up what it meant (at least in some circles): 'Those who ruin people and the earth with no thought for tomorrow'. Ha! A few I know might say 'c'est vous'! Kidding.

Seriously, your reply is helpful. And that's kind of what I thought....that there is no hard and fast rule. So I need to find out what I can about how expenses are viewed/handled locally. Will do. Schedule J alone makes me think the attorney's 2K fee is worth it. He's been doing this for 20 years.

[ApresMoi]

Good question. I don't know the answer. My impression has been, that it's your expected reasonable expenses, with arguments for "reasonable" being enormously strengthened by (a) not being wildly worse than IRS guidelines and (b) precedent in your past spending. For instance, I included a professional subscription and some textbook costs in my "other" that I have in fact been paying for the past few years, and I bumped a couple of other categories up a bit from recent history if I could reasonably argue that I've been painfully underspending (e.g., we are now overdue for various medical checkups, and our (exempted) car's well overdue for various maintenance) and we still remained under the IRS guidelines anyway. I only bumped above IRS guidelines for things I felt I had documentary proof of somehow being exceptional for (e.g., medical, given our diagnoses and past bills). For things like charitable contributions, that I'd normally just give cash for on impulse and not take a receipt for, I low-balled them fairly heavily through not really having much documentary evidence behind my claim. So, that's the take I ended up with, anyway, but, yes, I didn't really see a whole lot of guidance about schedule J given how very important it is, perhaps because such advice really does look like legal advice one needs a law license for!

(I couldn't find any advice from our district -- MA -- on these things.)

Thanks. Well, that's just it, I too am overdue on a lot of expenses that I've put off -- auto repair, root canal and the like. If I had to list 'actual' expenses, those are going to be low because I haven't been spending anything other than what is absolutely necessary. I see your approach though, and I think that's a good way to look at it -- try not to be wildly off from IRS allowances (or from local, if I can find any guidelines), and be prepared to document any expense that is 'over' or 'other'.

[justbroke]

Then I looked up what it meant (at least in some circles): 'Those who ruin people and the earth with no thought for tomorrow'.

Well, when I was working in Lyon, my French National friend said, basically, that it means "I don't care what happens after I'm done."... so I guess the meanings are close.

Seriously, your reply is helpful. And that's kind of what I thought....that there is no hard and fast rule. So I need to find out what I can about how expenses are viewed/handled locally. Will do. Schedule J alone makes me think the attorney's 2K fee is worth it. He's been doing this for 20 years.

If you're doing a Chapter 7 and aer borderline (near/over median, high unsecured debt), it's best to let a professional handle it!

au revoir

[ApresMoi]

Well, when I was working in Lyon, my French National friend said, basically, that it means "I don't care what happens after I'm done."... so I guess the meanings are close.

If you're doing a Chapter 7 and aer borderline (near/over median, high unsecured debt), it's best to let a professional handle it!

au revoir

**********
Bonjour!

Interesting nuance (the French National's definition). I'll go with that.

I am not borderline on the means test (way under median income for my state/area). "Le dilemme" (as to whether I should hire an attorney) rests upon the measurement of disposable income. And it isn't the 'income' that is in question (unemployment). It's those pesky expenses. I can fill out forms easily enough, but as to what is 'allowable' is more difficult. If the trustee disallows the rental of the storage unit as an expense, that would create a problem. So clearly, I have more work/research to do.

The attorney told me during the consult that I am "judgment proof" at least as of now, but I still think I should file as I don't want this hanging over my head for years to come. One (all?) of the creditors WILL (eventually) sue, or garnish, or try to get a lien on my personal property. I have no doubt of that. There are horror stories all over the 'net.

Bonne soiree...

[justbroke]

If the trustee disallows the rental of the storage unit as an expense, that would create a problem.

Rental of a storage unit is not a valid expense.

The attorney told me during the consult that I am "judgment proof" at least as of now, but I still think I should file as I don't want this hanging over my head for years to come.

I think our new stance on the "judgment proof" statement that is thrown around, is that no one is actually "judgment proof". A judgment can still be entered against you. However you may be "collection" proof.

One (all?) of the creditors WILL (eventually) sue, or garnish, or try to get a lien on my personal property. I have no doubt of that. There are horror stories all over the 'net.

Yes, this is their tactic, and as I wrote... there really is no real thing as "judgment proof".

[ApresMoi]

Rental of a storage unit is not a valid expense.

I think our new stance on the "judgment proof" statement that is thrown around, is that no one is actually "judgment proof". A judgment can still be entered against you. However you may be "collection" proof.

Yes, this is their tactic, and as I wrote... there really is no real thing as "judgment proof".

Thanks for clarifying (re storage). Collection proof is likely more accurate. Even if I am collection proof, that doesn't exactly give me peace of mind. What's not factored in is the emotional toll of debt collector calls, and the fear/worry of bank account seizures or getting served with legal papers.

I have decided to hire the attorney. It's not worth the hassle of all this, even IF I am collection proof. They could make me really miserable if they put their minds to it.