Please critique my preliminary Schedule J

[Foofy610]

We passed our means test several weeks ago. I'm trying to get a handle on whether we're a C7 or C13. I've just put together our preliminary Sched J.

Honest opinions welcomed!!

Net Income: $5,426

Mortgage: $1,631
HELOC: $500
Gas/Electric: $256
Water/Sewer: $78
Telephone: $30
Cable TV: $76
Cell Phone: $121
Internet: $5
Home Maint: $294
Food: $800
Clothing: $155
Dry Cleaning: $25
Medical/Dental: $275
Transportation: $185
Auto Repair: $493
Recreation: $125
Charitable: $40
Life Insurance: $54
Auto Insurance: $90
Reg Business Exp: $120
Furnace Maint: $16
Pet Care: $107

[ValleYum]

Your dollar amounts are for a family of how many? It's important to know since that drives the numbers

[Foofy610]

Oops! We're a family of 2.

[HHM]

If you pass the means test, schedule J won't matter that much.

-However, $800 per month on Food seems high, not just for BK purposes, but objectively speaking, that is a pretty hefty food budget. Even in the most expensive areas of the country, $600 is feasible and the truly budget conscious are at $450 or less.
-Also, auto repair of $483 (per month), that amounts to $5,796 per year, what are you driving that takes that much maintenance? That number just seems high (again, not just for BK purposes, but objectively speaking that is a high number).

You left out hygiene (unless that is embedded in the "food" meaning you meant food as general groceries).

Here is a sample list for an HH of 2, note, this list is not necessarily for BK, but to help with categories and get you thinking about what you spend.

Automobile (fuel, repairs, etc) $299.92
Bank Charge $4.17
Books $5.11
Cable TV $68.29
Charity $12.50
Christmas $31.75
Clothing $131.32
Computer $14.57
Diet $8.13
Dining Out $225.94
Dues $81.54
Education $2.08
Entertainment (movies, DVD etc) $97.72
Exercise $150.98
Fees $22.36
Fines $2.50
Freight/Postage $20.55
Furniture $53.72
Gardening $37.25
Gifts $28.08
Groceries (food only) $533.49
Home Decorating $35.75
Home Improvement $147.98
Home Repair $77.67
Household Items (e.g. light bulbs etc.) $101.58
Hygiene (cleaning supplies, personal hygiene) $147.07
Insuracne (Health etc) $169.00
Insurance (Auto, Life) $190.10
Internet Service $38.00
Laundry $29.14
Liquor $57.81
Medical (out of pocket) $56.32
Misc. $18.55
Mortgage $1,475.00
Office supplies $6.79
Pet Supplies and Care $70.78
Subscriptions $1.67
Telephone $112.88
Travel $19.39
Utilities (Gas + Elec) $151.25
Wine $??
Student Loans $98.00

[ValleYum]

Food seems high. Our food cost was $572 and that included pet food (we are a family of 2 as well - even though in a different state).

Dry Cleaning and laundry seems low to me - ours was $62. Detergent is so pricey now!

Cell phones seem high - do you need them for your business? Could you add part of the cost for them to your business expense?

Medical/Dental - make sure you can justify expenses

Internet seems low - Is that an introductory fee that will increase?

Home Maintenance - make sure you can justify expenses

Transportation and Auto Repair goes in same category - since your cars are older I am sure you can justify it.

Can you lower your deductibles to raise your auto insurance premiums? Also, is PA a state that uses credit profiling for insurance rates? I bumped up our insurance amount to include a potential rate increase due to filing BK.

Recreation seems high. We claimed $50.

Furnace Maintenance should be included with home maintenance.

I honestly don't think the Pet expenses are gonna fly (or be allowed at that amount).

When I subtracted your expenses, it showed DMI of -$50.

If the Trustee disallows the Pet expenses and some of your food expense - you will be very close to a DMI that would support a Chapter 13 payment.

I remember that your cars are older - have you thought about getting a new one? The payment would certainly help you stay in a Chapter 7 and if you did file have to/decide to file a Chapter 13 having a newer vehicle may be prudent anyway.

Business expenses are what they are (as long as you can document them)

Oh - I noticed that I did not see Garbage or recycling expenses - ours are around $75 per month. Have you guys considered getting some disability insurance like AFLAC?

[Foofy610]

Our monthly groceries average $600. I included dining out in the $800. Was that wrong of me? Also, the auto repair amount should be $293. Sorry for the typo. I averaged in a repair that will need to be done a.s.a.p. Is that wrong too?

[Foofy610]

Val... will I need to show receipts to justify all expenses? I used bank & credit card statements to come up with the amounts.

[HHM]

For schedule J, you would include dining out with Food. But in general, you should divide them out for your own budget purposes. From a lifestyle standpoint, your food budget is ripe for modification, after all, if you simply cut $200 per month from food, that is $2400 per year, in 10 years time, that could be $49,000 or more.

Pet care is somewhat subjective, if you have dogs, $107 is okay, if cats, that is too high (unless you have half a dozen)

Recreation, probably high. Find a way to divide it out into different categories. Recreation is a somewhat vague category and easy to object. You need to define what is included in that category (There is a place at the bottom of schedule J for notes, use it. That is how you explain things to the trustee.

Everything else seems pretty reasonable, but as I mentioned above, you are missing some categories that are important, hygiene, personal care, etc.

[Foofy610]

Hygiene & personal care are included in our grocery bill. It would be a bit difficult to isolate the cost.

[OHBOY]

Hygiene & personal care are included in our grocery bill. It would be a bit difficult to isolate the cost.

Why? Just take the amounts for haircuts,perms, perfume, deoderants, ect., ect. off the grocery bill and place it into a different catagory.

I too am puzzled at the l-o-w internet cost...PLEASE let me know how you manage that ...mine is $ 44.95 monthly

[Foofy610]

The $5 is a 12-month bundle promotional rate. I used that figure because it's shown on the bill.

[daylate]

You need to use current/projected expenses on a Schedule J-if you have 3 months left on the intro and 9 at higher-average them out. Or at the very least indicate where it asks about expected changes that your internet is going to increase by what 30-40 a month?

And I agree you need to get the expenses into the right category so they look right. And from my point of view, you don't need an exact average of the last x months. make a list of typical monthly purchases and put down what each costs. if you buy shampoo every two months, then put 1/2 each month

[Foofy610]

How do I prove the rate increase? Will I have to show something from the cable company?

[momofthree]

Honestly, anything over IRS standards will probably ping the trustee's radar. You can view the standards here: http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

As you can see, for a household of 2, they allow $985/mo for all food, household supplies, clothing & services, personal care products and services, and misc expenses, so you'll probably be okay with what you listed. It might make sense to break it down into the IRS categories though because that $800/mo food does stand out like a sore thumb. If it was broken down into household supplies, personal care items, and food separately it might look better to the tt.

IRS standard non-mortgage housing expense (for things like utilities, home maintenance, etc) averages about $500/mo for your area. You have $876 listed. This could be a problem.

You'll have to show proof of medical/dental expenses since they are nearly triple the IRS standard.

Pet care & recreation could go either way depending on your trustee. Both seem high.

As long as the car repair is $293, you're only slightly over the IRS operating expenses for 2 vehicles, so it should be fine, BUT when that is adjusted down from the $493 you posted, you end up with a DMI of $150.00 which puts you in ch.13 territory. And if the tt wants to object to even 1 of your other expenses, the chances of being a 13 are very real.

Honestly, I'd suggest buying at least 1 new car if you want to avoid a ch.13. You're spending a lot of money on repairs, so you probably need one anyway.

[Pandora]

First - what is your gross and what does Schedule I come out to?

I agree with everyone else - your expenses are very high for a family of 2. Right now you're showing (based on your numbers) expenses of $5476 with a net income of $5426; making it -50 DMI... HOWEVER...

Realistically speaking, depending on the Trustee and how he/she works things you could have a ton of DMI to go into a Ch. 13. You stated your lawyer came up with a possible +DMI of anywhere between $500 - $1000 a month and I can see it going a bit higher depending on certain things. You're already over median, and any trustee worth their weight is going to see padded areas in your expenses way above the standards.

Here are issues that I see which can cause a high DMI, basing all of your numbers off of what we were allowed (we are a family of 3):

HELOC: Will you be continuing to pay on your HELOC every month? Are you behind currently? +500 possible increase depending on what you're doing / planning to do

Home Maintenance: Very high - you'll be more apt to be approved for $75-$100 +193

Food: Way high; we are a family of 3 and get $600 a month. +200

Clothing: Again, high for 2 people. Family of 3 we get $75 + 80

Medical / Dental: Unless you have ongoing health conditions / illnesses / diseases that you can prove, average is $120 for a 2 person household. + 155

Auto Repair: extremely high - we get $50 a month between 3 vehicles - so if you're lucky you may get $100. +393

Recreation: again, we're allowed $60 and that includes soccer for our son. +65

Business Expenses: what are these exactly? Gas? Travel time? You have to be able to show proof of expenses via your tax returns since generally those are usually claimed there. If you can't prove it - add +120

Furnace: This is under household maintenance +16

Pet Care: Think you'll get about $50 for this, and that includes food and vet visits. +57

Adding it all up you could be looking at a + DMI of anywhere from $1159 (Heloc & business expenses allowed) to $1779 if they're not allowed - based on the red numbers above (excess). Of course, you could be allowed higher amounts, but the car repair amount alone that you're claiming can set you into a Ch. 13.