Schedule J and 1099 expenses

[bellows321]

My spouse and I are hoping to file Ch. 7, but our J shows about $400 dmi. My husband does 1099 construction work and his pay fluctuates wildly. It just happens that the past six months were not as dire as the six months before that. We deduct all of his expenses related to his work, including vehicle fuel and maintenance. Considering he needs a set of tires and in the coming year, there will need to be serious maintenance on the truck, is it reasonable to budget in a line for vehicle maintenance? How will the trustee take that (if that can even be guessed at)? We can show vehicle maintenance receipts for the past 12 months, and it comes to nearly $4k. I figured on approximately $3k for 2011 repairs and maintenance based on past cost. (He puts about 1000 miles a week on the vehicle). I'm concerned about having to file a 13 and not being able to save any money to cover repair contingencies like this. With no vehicle, my spouse cannot earn a living.

We would have filed earlier in the year, but my credit union had cross collateralized my car with the credit card I had with them (and didn't tell me about it when I refinanced with them) and we had to catch up the card payments so I could pay the car off and get the title. It was a mess. Letting my car go wasn't an option because I work 30 miles south of where I live (spouse works 75 miles north of where we live).

[tcreegan]

Hi bellows321,

past 12 months, and it comes to nearly $4k. I figured on approximately $3k for 2011 repairs

...the repair costs aren't likely to be going down as the vehicle ages, 4K last year, 4.5K next year

maintenance receipts for the past 12 months ...sounds documented to me...

is it reasonable to budget in a line for vehicle maintenance? Danged right! schedule J, line 8

pay the car off and get the title. Texas is in the 5th Judicial Circuit which has held that an ownership expense can be claimed even if the vehicle is paid off....at least on the means test. Something you might check into. (remember there are 2 expenses: operating and ownership)

If you post your schedule J expenses, folks around here will look at them and comment where they look low or high

..something(s) to think about anyhow,

Tom in Colo

[rdknipp]

Along with TC's good advice. you can probably reduce your schedule I income. Its a projection of what your income will be - you do not have to use the average of your last six months like the means test. This is something that can come in handy with construction workers who often make less in the winter months. Take a look at what your income was over the past 12 months and use that monthly average on I - not the average of just the last 6 more profitable months.

[bellows321]

I'm not sure I can reduce the schedule I income since all of the reductions are in the amendment to Schedule J

Our Schedule J is:
Rent $910
Utilities $182 (don't know why the lawyer put this down, it's usually about $50 higher)
Home Maint: $50
Food: $525
Clothing: $130
Laundry & dry cleaning: $20
Medical & dental: $120
Transportation: $350
Recreation etc.: $125
Auto ins: $106
Renter's ins: $50
Truck loan (reaffirming): $480
Student loan: $188
Student loan: $87
Misc: $423

List of business Expenses:
Cell & mobile internet: $210 (the lawyer has the wrong figure, it's higher)
Commerical insurances: $100
Supplies & materials: $100
Labor: $100
Tools & Equipment: $375
Fuel and vehicle maint: $1400 (its high I know, but we have receipts and mileage records)

And I would like to budget in $325 for vehicle repair. Although according to Tom in Colo, I might want to increase that amount. The lawyer seems a little skeptical, but it's the trustee we have to convince right?

Also, both of us need crowns (lame!) and even with dental insurance, the cost is going to be $1000 each. This has already been put off for a year. Is there any way we can try to get this cost in the budget?

And many thanks for answering my questions. My lawyer is grilling us hard on these costs, I guess she's trying to make sure we don't mess up.

[tcreegan]

Hi again bellows,

I'm not sure I can reduce the schedule I income since all of the reductions are in the amendment to Schedule J

Not a reduction like an expense or deduction, just lowering the income. Schedule I is 'forward looking' so you can project your income, what is it likely to be in the near future.

Student loan payments are not usually allowed, make sure your atty knows about this.

Medical looks way low, avg the dental in there and look for things overlooked...

Atty might have dropped utilities to be below $200

I was thinking you could raise the vehicle maintance b/c you had good records

How about home maint.? I seem to remember that $50 is standard, but unrealistic...

My lawyer is grilling us hard on these costs, I guess she's trying to make sure we don't mess up. ....sounds like a good idea to me...

Hope this helps some,

Tom in Colo

[bellows321]

Thanks Tom in Colo. We added a line for budgeted work vehicle repair and maintenance: $450, and adjusted the utilities another $50. I requested that we add the dental budget in there somehow. We sat down and calculated the cost of our prescriptions/medications and doctor visits, and we actually came out on the nose, but that figure does not include dental. We also added my husband's student loan because she had mine listed. And I have to go on a mini-rant here. It is complete bs that student loans cannot be counted in a budget. The only way to get out of paying student loans is to die. If the courts don't let you include that, you're just going to get into more $$ trouble.

On that note, a pal of mine had a boyfriend who told her that he was going to fake his death to get out of his student loans. She hasn't heard hide nor hair of him for years, so who knows.

[rdknipp]

I'm sure it varies from district to district but we have never had any trouble including student loans in the Sch I & J budget.

In your business budget you have fuel and maintenance at $1400 - if you are going to add another $450 on a new repair and maintenance line you may want to delete the word maintenance in fuel and maint to avoid looking like you are double counting the repairs.

Do you have any personal property tax? You can take a monthly average of what your yearly personal property tax is. That might get you another $25-50.

[scorpion35]

student loans don't count

[rdknipp]

Like I said, what the trustee may or may not object to varies from district to district. In my district, the trustees do not usually object to the inclusion of student loan payments in Schedule J - whether he has the right to do so or not. I cannot speak to how trustees in other districts will operate.