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Means Test - Critique my expenses please.

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    Means Test - Critique my expenses please.

    In SW Florida. Took a HUGE reduction (lost 100K) in pay last year. Have not been able to make it up. Eat thru my savings. 160K unsecured debt. No attachable assets. Can you please critique my monthly expenses and see what would get rejected or require scrutiny by trustee. I assume I would qualify for Chapter 7 even though i am over the means test for income????

    3 people in household - me, wife and 18yr old son (fulltime college student)

    Income 5,416.67
    Income Tax 406.00
    Social Security 392.00
    401K 270.83 5% Contribution to get company matching funds

    total 4,347.83

    Mortgage 506.00 Keeping House (homestead exemption)
    Electric 350.00
    Water 75.00
    Cellphone 200.00 (me + family plan wife, son and mother)
    Internet 43.00
    Satelite TV 100.00
    Home Maintenance 200.00
    Food 750.00
    Clothing 200.00
    Laundry 50.00
    Medical 450.00 Actual pharm and dr copays

    Transportation 698.00 2 cars - total 22,000 miles driven annually
    (22,000 * .5 irs mileage)/12 months
    less auto loan. only way I could figure to
    calculate gas/oil/tires/wear etc.
    one car is a real gas guzzler
    Tolls 50.00
    Entertainment 250.00
    Donations 250.00 Tithing (actually do 10% but i'm sure that
    wont fly)
    HomeOwners Ins 166.67
    Health Ins 55.00
    Auto Ins 236.00
    Property Taxes 500.00
    Car Loan 218.00

    Total 5,464.67

    Shortfall (999.83) Need to figure this out after BK!!!

    #2
    Looks ok to me, but after reading here for a few hundred hours I am learning:

    Entertainment over $100 a month is likely to cause trustees to flinch. Creditors want their money, so it becomes a "no fun for you."

    Charity at $250 is high, reduced income often means reducing what you can reasonably give. Even if you can prove this amount or more it might be time to reconsider if this fits into your new lower income.

    Home maintenance seems to cause a stir if it is over $100 a month. I am not sure why, but I keep reading it over and over again. I would like to list $400 a month in maintenance...I need a roof, some plumbing, fix broken windows , and replace 20yr old carpets. At $100 a month I *might* get this all done before I am in a nursing home in 50 years. But that is still the recommended amount to not draw too much attention from the courts.

    Just my opinion, I am not an attorney, judge, trustee. Just a fellow passenger a the sinking ship.
    I am not an attorney. I am just a fellow passenger on a sinking ship. Anything posted above is my opinion or best guess, and nothing more.

    Comment


      #3
      I agree with Maine. My attorney frowned at recreation/entertainment at 200/month. Tithing however may be considered depending on the trustee and length of history. Your electric seems high, but as long as your total combined utilities and mortgage fall within the IRS averages for means test purposes, you should be ok.
      Stopped paying: 08/10, Filed CH7: 08/27/10 , 341 & No Asset Report: 10/6/10, Last day to object: 12/06/10, Discharged: 12/07/10, Closed: 12/08/10
      AHEM.....NOT AN ATTORNEY, NOT ADVICE, ETC, ETC

      Comment


        #4
        Did you do the online means test? I do not think the cell phones count. Not sure about cable, but my stepdaughter said it did not count when she filed 13. I am studing the means test now for my BF is considering it.
        chpt 7 ,5-2009

        Comment


          #5
          The means test needs to use the IRS standards for most things; schedule J is where the "actual" expenses go.

          OP have you done the nolo calculator for the means test? Much easier than trying to figure it out on your own.

          Comment


            #6
            The entertainment is too high. Make it $100

            The 401k contribution will most likely not be allowed if you are over the median.

            The donations will be looked at very very closely and you will have to prove a long history of donating.

            Basic cable is fine, bu the cell phone bill is high.

            The food bill needs to be the IRS standard for 3 people in Florida. Anything else will be questioned.

            Home maintenance is way too high. If you have receipts fine, but it will be questioned.
            You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

            Comment


              #7
              Entertainment - time to cut back. You're bankrupt so you don't have $250 per month to spend on entertainment.

              Charity - if you have a paper trail then this should not be a problem. Actual charitable contributions, even if the trustee does not like it, gets counted. But if you can't prove it, drop it.

              401k deductions will not likely be allowed as an expense.

              $200 for cell seems high. Providing a cell for your 18 year old child & mother won't carry much weight w/ the trustee.

              $200 home maintenance - can you back this up with a paper trail?

              $450 medical - assuming you can back this up as well with receipts, doctor's info, etc.?

              Vehicle maintenance seems high also. $25 x 2, 4 times a year for oil changes = $200 or $17 a month. If you average 20 miles per gallon @ $3/gallon (not sure where your gas is right now, but believe everyone is under $3) $275 per month. Occasional tires, brake work, etc. can't be $400 per month. Keep in mind the IRS standard assumes for depreciation of the vehicle also, and you can't exactly claim depreciation as an expense in filing BK.

              $750 food is high. For 3 people, you should be able to do alot less.

              While the electric bill might be considered high for some if that is what you pay, it goes in. Actual utilities should not be questioned. If this is the high and some months you pay less, contact your utility company about going on a budget plan where they have you pay an average bill each month.
              Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
              (In the 'planning' stage, to file ch. 13 if/when we have to.)

              Comment


                #8
                Health insurance is only $55/month?

                And I didn't see a life insurance expense, but that's OK if you don't have any. It's just that we pay on my husband's only once a year, so I nearly forgot to include it on our forms.

                If you haven't pored over your bank statements, credit card statements, receipts, etc. for the last year or two, do that. You will find expenses you forgot about (not that they are all allowable, but they might be). Bank charges. Post office. Printer cartridges. Etc.
                Filed non-consumer no asset Chapter 7 on 7-12-10 after 4 foreclosures, 7 lawsuits including 2 deficiencies, 2 wage garnishments, a bank garnishment and a partridge in a pear tree. 341 held on 8-11-10. Discharge 11-4-10.

                Comment


                  #9
                  You may want to check out the IRS standards for bk means testing:

                  Food $626
                  Housekeeping supplies $61
                  Apparel & services $209
                  Personal care products & services $59
                  Miscellaneous $197

                  Total $1,152

                  I believe the misc is to cover anything else not listed in the means test, such as cell phones, internet/tv, home maintenance, entertainment, etc. Looking at your list of "extras" you are claiming closer to $1800, which is more than $600 over.

                  Your transportation expense is not going to fly. You don't get to claim "per mileage" expense. You claim actual expenses incurred, and the IRS standard for operation & upkeep of 2 vehicles is $478/mo and includes gas. You're claiming $220 more than that. You need to add up actual expenses. At 22k miles per year, you probably average around $300 (or less) in gas each month. Tags $400ish a year? Oil changes, tuneups, tires, etc maybe $1400/year? That comes to around $450/mo. for 2 vehicles. If you can show receipts for actual expenses that exceed IRS standards, then you'd probably be fine, however, only driving 22k a year, I doubt your actual expenses exceed the standard.

                  If you have proof of your 10% tithing going back several years, they can't say a damn thing about it. Claim it.

                  Medical will require receipts, but it's allowable with proof. It also helps that your insurance is so inexpensive.

                  Even reducing these expenses, it looks like you'd probably still be in the negative, or just breaking even, so you should still be fine, but may want to adjust it so that you can slide in under the radar without objection. Your attorney will be your best resource as to what will fly and what won't. Good luck!
                  Filed Chapter 13 on 2-28-10. 341 completed 4/14/10. Confirmed 5/14/10. Lien strip granted 2/2/11
                  0% payback to unsecured creditors, 56 payments down, 4 to go....

                  Comment


                    #10
                    Originally posted by ccsjoe View Post
                    I agree with Maine. My attorney frowned at recreation/entertainment at 200/month. Tithing however may be considered depending on the trustee and length of history. Your electric seems high, but as long as your total combined utilities and mortgage fall within the IRS averages for means test purposes, you should be ok.
                    I'm in Michigan...

                    My electric and gas bills are a combined amount of $295 and my mortgage is $1404 and RE Tax is $396 a month. I'm over the IRS amounts but not sure how I can change the amounts...

                    Will this be a problem with the Trustee?
                    Chapter 7 filed 11/4/10 ---- 341 Meeting 12/1/10 ---- Discharge 1/31/2011.

                    Comment


                      #11
                      Fallonedward,

                      For your mortgage use you actual mortgage expense if higher than IRS standards, that's ok. Do not include RE Taxes; I believe they get listed elsewhere on the means test. After that, are still over the IRS standard?
                      Stopped paying: 08/10, Filed CH7: 08/27/10 , 341 & No Asset Report: 10/6/10, Last day to object: 12/06/10, Discharged: 12/07/10, Closed: 12/08/10
                      AHEM.....NOT AN ATTORNEY, NOT ADVICE, ETC, ETC

                      Comment


                        #12
                        Line 37 on 5b of the means test allows you to enter home energy costs in excess of the irs standard. Be ready to prove every penny of it.

                        In the means test Real estate taxes are included in the housing allowance standard and there does not appear to be a place to put in if you pay more than the standard. My mortgage+ re tax is more than standard but the calculator only gives me standard.

                        (If you get past the means test you can deduct your actual housing expenses on Schedule J.)
                        I am not an attorney. I am just a fellow passenger on a sinking ship. Anything posted above is my opinion or best guess, and nothing more.

                        Comment


                          #13
                          Originally posted by ccsjoe View Post
                          Fallonedward,

                          For your mortgage use you actual mortgage expense if higher than IRS standards, that's ok. Do not include RE Taxes; I believe they get listed elsewhere on the means test. After that, are still over the IRS standard?
                          My taxes are paid with my mortgage payment...will this still be ok?
                          Chapter 7 filed 11/4/10 ---- 341 Meeting 12/1/10 ---- Discharge 1/31/2011.

                          Comment


                            #14
                            Out if curiosity, what happens when a trustee questions an expense on schedule j and you have no proof of it? does it get lowered and possibly have to go to a 13? or does your case just get dimssed?

                            Comment


                              #15
                              hawk..that happened to us...however, it was the trustee's mistake...they questioned us about an incorrect amount...apparently, they looked at the wrong line.

                              i think if you can explain it well enough..it's good....

                              DG...yikes...entertainment will NEVER go over....but you might start eating a bit more!!! i know when our son was 18, i'd rather of clothed him than feed him! he must have eaten 100 worth of food alone a week...LOL!!

                              charity...well we have ALWAYS and forever given 10% of our total income to charity. so, that could challenge one's religious believes...
                              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                              Comment

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