Help! Need to Make Expense Decision Today

[ApresMoi]

The law firm is now telling me to 'average' my expense. I have no idea what that means. If I average based on the last year, I will come up with a low number for several categories. What time frame do I look at for 'average' expenses? Last year? Going forward? Please don't tell me to ask the law firm.

I had planned to purchase health insurance TODAY (deadline is today) and thought I was going to be able to list that $200+ expense on Schedule J. But if I list an average instead, I don't know WHAT do do. I plan to file next month, and thought my Feb. expenses (the actual expenses) were what I would be listing. Please help!

I read HHM's stickie on expense, and that didn't really answer the question as to what timeframe you're looking at. Some say one thing, some say another.

I mean, if I listed a $200 per month expense, is a U.S. trustee going to say, where are your receipts for the past 12 months of a $200 medical expense? I really do not know how this works. It will definitely be to my advantage to be able to list the $200 as an expense.

Also, it doesn't make sense to take an average of expense, then not take an 'average' of income. I didn't collect unemployment for a LOT of months last year. Either I wasn't eligible or it wasn't available. I wonder if the law firm will tell me to take an 'average' of income. If they don't, but tell me to average expenses, that is going to create an inaccurate picture of income and expenses. Geez.

Does anyone have attorneys that advised them on this? What did they say? Thank you!

[DebtHater]

To list your expenses on the Schedule J you take the years worth of expenses for that category and divide by 12. This will be your monthly average.

Example: I'll use approx $250 per month for heat from December through April (5 months) but nothing from May through November (7 months). Regardless what time of year you take the average it will be $104.17 per month ($250 x 5 = $1250 / 12 = $104.17).

For your health insurance even though you know what it is this month ($200), you should have an estimate on what it will be in over the course of the year. If you know the estimate for 12 months of health insurance is $3000 per year, divide that by 12 and use that number (250).

When I filed I did not need to provide any receipts. I only needed to provide the last month's bank statements.

My Schedule J has $50 entered for life insurance. I did not spend $50 this this month, last month or next month since I pay my premium once a year (in May). Even though there was nothing paid on it in my statements that were submitted didn't result in any questions from the trustee. I don't think there will be any questions raised in your estimates either. $200 a month in medical insurance is not unreasonable. I don't think it will cause any problems in showing it in the Schedule J.

In summery, do not list only your current months expenses but your annual expenses divided by 12. It states in the directions of my Schedule J "Complete this schedule by estimating the average or projected monthly expenses of the debtor ..... at the time case is filed. Prorate any payments made bi-weekly, quarterly, semi-annually, or annually to show monthly rate.... ".

[ApresMoi]

Whew, very helpful response. Thank you. I've decided to buy the health coverage regardless. Good to know I will can list it though. Starting to fill out the bankruptcy forms. Lots of work to do, in other words.

To list your expenses on the Schedule J you take the years worth of expenses for that category and divide by 12. This will be your monthly average.

Example: I'll use approx $250 per month for heat from December through April (5 months) but nothing from May through November (7 months). Regardless what time of year you take the average it will be $104.17 per month ($250 x 5 = $1250 / 12 = $104.17).

For your health insurance even though you know what it is this month ($200), you should have an estimate on what it will be in over the course of the year. If you know the estimate for 12 months of health insurance is $3000 per year, divide that by 12 and use that number (250).

When I filed I did not need to provide any receipts. I only needed to provide the last month's bank statements.

My Schedule J has $50 entered for life insurance. I did not spend $50 this this month, last month or next month since I pay my premium once a year (in May). Even though there was nothing paid on it in my statements that were submitted didn't result in any questions from the trustee. I don't think there will be any questions raised in your estimates either. $200 a month in medical insurance is not unreasonable. I don't think it will cause any problems in showing it in the Schedule J.

In summery, do not list only your current months expenses but your annual expenses divided by 12. It states in the directions of my Schedule J "Complete this schedule by estimating the average or projected monthly expenses of the debtor ..... at the time case is filed. Prorate any payments made bi-weekly, quarterly, semi-annually, or annually to show monthly rate.... ".

[DebtHater]

Whew, very helpful response. Thank you. I've decided to buy the health coverage regardless. Good to know I will can list it though. Starting to fill out the bankruptcy forms. Lots of work to do, in other words.

Good luck. Take your time on the forms. Better to have all your I's dotted and T's crossed than to rush through.