Will Trustee Question New Expenses?

[ApresMoi]

I am reviewing all my Schedule J expenses, which are currently rather low, since in months past every available cent was going toward minimum payments on the credit cards.

I was told during one of the atty consults that buying health insurance would improve my Ch. 7 position. I also don't have renter's insurance or adequate levels of auto insurance (the car is insured at the absolute bare minimum).

I'd also like to get a phone with Internet access (a PDA), so the next time I get lost in a sketchy neighborhood I can get home safely (by using online maps). If I do this, my rate plan will increase from $44 to $70 (minimum) per month. Will this be OK? Even if I make this change, my overall 'household and utiliies' expenses are still WAY below the IRS allowed amounts for my household size.

I guess overall, I am concerned about how adding expenses in the month before filing (if I file in Feb. when I pass 90 days.) would look to a Trustee.

This is turning out to be harder than I thought. There's a lot of work involved in coming up with accurate valuations, accurate expenses, etc. Geez.

I also need to know if I have to have receipts for all the expenses I am claiming. I really don't know how that will be possible, as my habit has been to shred everything instantly (to protect against ID theft!). I am saving receipts NOW, but have only been doing so for a few weeks (once I realized I might need them for a BK).

Should I get busy adding expenses? Please help!

[Faust]

Good questions. I am assuming that if the expenses are within reason then they will be allowed.

During the last year we have had to cut back on so many things to pay creditors that we have hardly had money for food. I highly doubt the court expects that continued cost cutting and will allow the full allowed amount for food for three people to be claimed.

I had also reduced our insurance amounts and stopped contributions to 401K. I hope to up those things but I'm sure our atty will let us know what is or is not allowed. Let us know what you find in the mean time.

[coolmom04]

This is turning out to be harder than I thought. There's a lot of work involved in coming up with accurate valuations, accurate expenses, etc. Geez.

I don't know the answers to your questions (sorry), but I can totally agree with you on this!!! I had NO idea how difficult this was going to be, BUT - everyone on this board relieved a ton of stress and have taught me SO much! I hope you can get the same things out of the board.

I am sure someone will come along with answers.

[BobMango]

Assuming that you are filing a Chapter 7 (since we're in the Ch7 forum) you would not generally need receipts as long as the expenses are within the norms for your district.

I told the trustee that I needed to modify my Schedule J to bring my expenses down to show a positive DMI for a reaffirmation. Didn't question a thing. I thought I'd get a question like, "what changed since you filled out the paper work?", etc. I was prepared to answer but never got a question on it. I think the notice of no distribution was actually filed before my attorney got the papers to the court.

[ApresMoi]

Assuming that you are filing a Chapter 7 (since we're in the Ch7 forum) you would not generally need receipts as long as the expenses are within the norms for your district.

I told the trustee that I needed to modify my Schedule J to bring my expenses down to show a positive DMI for a reaffirmation. Didn't question a thing. I thought I'd get a question like, "what changed since you filled out the paper work?", etc. I was prepared to answer but never got a question on it. I think the notice of no distribution was actually filed before my attorney got the papers to the court.

Thank you both. Yes, I am looking at a Ch. 7. The catch22 is, I need these things (especially better car insurance) but I don't really want to take on more expenses at a time when the future is so uncertain. I am probably worrying over nothing. I think I read on some attorneys blog (Florida?) that it's a good idea to make 'changes' in one's lifestyle a good three months in advance before filing (if that is what one is going to do do). Since I am not talking about anything extravagant or unnecessary, I think these added expenses would probably be okay.

[jribe]

I forgot if you're in CA?

Many times the trustees don't even ask for your receipts for expenses- unless you're over median.

I wasn't asked to prove any expenses whatsoever.

You can add the expenses before filing. It's not like you're going out and buying a 40k car to qualify

I am reviewing all my Schedule J expenses, which are currently rather low, since in months past every available cent was going toward minimum payments on the credit cards.

I was told during one of the atty consults that buying health insurance would improve my Ch. 7 position. I also don't have renter's insurance or adequate levels of auto insurance (the car is insured at the absolute bare minimum).

I'd also like to get a phone with Internet access (a PDA), so the next time I get lost in a sketchy neighborhood I can get home safely (by using online maps). If I do this, my rate plan will increase from $44 to $70 (minimum) per month. Will this be OK? Even if I make this change, my overall 'household and utiliies' expenses are still WAY below the IRS allowed amounts for my household size.

I guess overall, I am concerned about how adding expenses in the month before filing (if I file in Feb. when I pass 90 days.) would look to a Trustee.

This is turning out to be harder than I thought. There's a lot of work involved in coming up with accurate valuations, accurate expenses, etc. Geez.

I also need to know if I have to have receipts for all the expenses I am claiming. I really don't know how that will be possible, as my habit has been to shred everything instantly (to protect against ID theft!). I am saving receipts NOW, but have only been doing so for a few weeks (once I realized I might need them for a BK).

Should I get busy adding expenses? Please help!

[ChaseDidThis]

I agree filling out schedule j was tough, mainly because we in debt never had a real budget, and if done correctly, that is what schedule j will give you. You probably shouldn't show more than $50 of DMI. As long as your not over IRS standards you should be ok and not need receipts. Your Attorney should help you with specifics, such as my attorney wanted me to lower my food budget alittle and spread it somewhere else, even though i was under IRS limits, it was a little above what the trustee likes to see in my district.

Schedule j should show your future and ongoing expenses, so yes better auto coverages would be ok, just make sure you include all those expenses you used to put on those credit cards also, such as clothes, food, auto repair, etc.... You do all this and you'll probably have no problem using up all the income.

[ApresMoi]

I forgot if you're in CA?

Many times the trustees don't even ask for your receipts for expenses- unless you're over median.

I wasn't asked to prove any expenses whatsoever.

You can add the expenses before filing. It's not like you're going out and buying a 40k car to qualify

Thank you. I have been looking at expenses all day. I really feel like I have been put through the wringer. The exercise is an eye opener, I must say.

It's not wasted effort, as I'll use the spreadsheets to track expenses throughout 2010, but still. What a fun project (NOT).

Good to know about the receipts. I'm saving them up now, just in case.

When I punch in what I want/need to add, expense-wise, I'm coming up NEGATIVE $224. I think that looks bad (not to mention that I can't afford it). What's the maximum "negative" you recommend? I definitely want to have room for error in case they disallow anything (like basic cable or the internet).

Yes, I am in California. Thanks all.

[ApresMoi]

No, I won't have any problem using up the allotted amounts. The problem is paying for the added expenses!! :0

That's interesting what you say about your atty. wanting you to adjust according to district averages. I am not finding much info in that regard. I would LOVE to turn this over to an attorney. But if I hire him (and he seems like a nice guy), I won't have funds to take on the additional expenses (that are necessary for the disposable income test). So I may be 'forced' to file pro se, which I am not keen to do. Sigh. I don't think it's anything I can't handle, just that I'd rather let someone else worry about these details.

Onwards!

***********

I agree filling out schedule j was tough, mainly because we in debt never had a real budget, and if done correctly, that is what schedule j will give you. You probably shouldn't show more than $50 of DMI. As long as your not over IRS standards you should be ok and not need receipts. Your Attorney should help you with specifics, such as my attorney wanted me to lower my food budget alittle and spread it somewhere else, even though i was under IRS limits, it was a little above what the trustee likes to see in my district.

Schedule j should show your future and ongoing expenses, so yes better auto coverages would be ok, just make sure you include all those expenses you used to put on those credit cards also, such as clothes, food, auto repair, etc.... You do all this and you'll probably have no problem using up all the income.

[lrprn]

When I punch in what I want/need to add, expense-wise, I'm coming up NEGATIVE $224. I think that looks bad (not to mention that I can't afford it). What's the maximum "negative" you recommend?

AM, if you want to file Ch 7, then you WANT a negative number on the Means Test and Schedules. It doesn't matter how much negative you are - just that you are negative.

Also do keep in mind that if you are close to the CA median income for your family size, just because your version of the forms and figures comes out negative, you really need an experienced bk lawyer to fill out the forms using all the latest case decisions and other court cultural differences to ensure you actually do show no disposable income (or at least less than +$100/month) to ensure you can file Ch 7. Are you planning to file pro se (without a lawyer)?

[DeadManCrawling]

I was negative by nearly 6k. Big number, but accounted for by gigantic mortgage and medical expenses in the last 4 years.

My income had nose-dived because of this.

We had new expenses by the dozens, and listed everything in our credit reports, which meant most things were listed several times.

On the schedules our income was below median but our debt was over 1.5 mil because of the multiple listings of debt.

We were not asked any questions about any of this at our 341.

I suspect that if you appear to be, in general, honest about your numbers, and do not claim silly things like 2k per month in pet supplies, you will likely not be questioned.

We filed 7 in FL Middle, and had one of the toughest trustees in the nation.

But we were honest, had nothing to hide, and voluntarily gave up a BMW we could not fit in the exemptions. Our experience was: Honesty equals smooth sailing.

Not saying you are not being honest, jsut sharing our experience with one notorious trustee in a very tough district.

Best,

-dmc

[ApresMoi]

We're not talking big numbers here. I live on next to nothing. It's no way to live, but it's what I thought I had to do to cover the cards every month. I have finally given up on thinking that i will ever be able to dig my way out of the card debt. Therefore, Ch. 7!

Your numbers are unfathomable to me. If they won't blink at 6K in the red, then I am beyond silly for worrying about a few hundred. I read you story about the people your trustee crushed. Sounds like they deserved it though.

I was negative by nearly 6k. Big number, but accounted for by gigantic mortgage and medical expenses in the last 4 years.

My income had nose-dived because of this.

We had new expenses by the dozens, and listed everything in our credit reports, which meant most things were listed several times.

On the schedules our income was below median but our debt was over 1.5 mil because of the multiple listings of debt.

We were not asked any questions about any of this at our 341.

I suspect that if you appear to be, in general, honest about your numbers, and do not claim silly things like 2k per month in pet supplies, you will likely not be questioned.

We filed 7 in FL Middle, and had one of the toughest trustees in the nation.

But we were honest, had nothing to hide, and voluntarily gave up a BMW we could not fit in the exemptions. Our experience was: Honesty equals smooth sailing.

Not saying you are not being honest, jsut sharing our experience with one notorious trustee in a very tough district.

Best,

-dmc

[ApresMoi]

AM, if you want to file Ch 7, then you WANT a negative number on the Means Test and Schedules. It doesn't matter how much negative you are - just that you are negative.

Also do keep in mind that if you are close to the CA median income for your family size, just because your version of the forms and figures comes out negative, you really need an experienced bk lawyer to fill out the forms using all the latest case decisions and other court cultural differences to ensure you actually do show no disposable income (or at least less than +$100/month) to ensure you can file Ch 7. Are you planning to file pro se (without a lawyer)?

I am not even close to the median income for my size holdhold (am at about 50% of the median) so I didn't have to complete the rest of the exercise on Form 22. I am now looking at Schedules I and J.

As to pro se, I don't have any solid plans YET, but I am realizing that if I pay an attorney the going rate, I will not be able to afford the health insurance and a few other expenses that I had planned (and need) to add to qualify for Ch. 7.

I have the Nolo book and will make the decision whether to file pro se after reading it in more detail.

Yes, I know a negative number is desireable, just did not know if several hundred negative 'looks bad' (as if I don't know how to budget). Doesn't sound as though that would be a problem at all. Thanks.

If anyone knows of a great SoCal attorney who is 'reasonable' please PM me. I have gotten quotes from a few, and they are all in the 2K range, plus filing fee.

[munchkn813]

I have been wondering the same thing as we have been wanting to add homeowners insurance, insurance on my engagement/wedding rings and stuff for the past couple of years and haven't been able to afford it. I would love to do it now that I have stopped paying the credit cards, but wasn't sure if it would look bad or not...

[jribe]

well on my schedules, i actually had my expenses lower (a lot lower) than my actuals and much lower than IRS standards. I orginally wanted to reaffirm the car, and thought it would never happen if i put my actual numbers. I'm really about $600 negative every month, but i put that i was only about $100 negative on the schedules.
I think the neg $224 is fine. Obviously there's nothing else you can stretch- you need BK. The trustee can't really question you're filing just because your that much negative.

I wasn't questioned for anything at all though. The trustee was actually very nice. I don't remember what district of CA that you're in - but i'm in Eastern and everything went so smoothly- i'm glad i didn't hire an attorney. I ddin't really have the extra money to spend on one; but i would have gotten it somehow. After the 341 though- i realized it wasn't necessary in my case. Unless things are pretty complicated, or you don't want to deal with the paperwork- you can do it yourself pretty easily.

Thank you. I have been looking at expenses all day. I really feel like I have been put through the wringer. The exercise is an eye opener, I must say.

It's not wasted effort, as I'll use the spreadsheets to track expenses throughout 2010, but still. What a fun project (NOT).

Good to know about the receipts. I'm saving them up now, just in case.

When I punch in what I want/need to add, expense-wise, I'm coming up NEGATIVE $224. I think that looks bad (not to mention that I can't afford it). What's the maximum "negative" you recommend? I definitely want to have room for error in case they disallow anything (like basic cable or the internet).

Yes, I am in California. Thanks all.