chapter 7 and "surplus" income in CA

[LadyInTheRed]

The lowest rental allowance for a family of 4 in California is $1,306 in Trinity County. You don't plan on living with family forever, right? If I were you, I'd figure out what a modest but more reasonable rental would cost for my family size and use that. Schedule J should be forward looking.

I don't think $150 for recreation for a family of 4 is unreasonable. I had $50 for a family of 2 and it wasn't questioned. But, different trustees will have different views. That's the advantage to hiring an attorney who will know the local trustees.

I'd be more worried about the $100 cable internet.

What about car registration and maintenance, personal hygiene supplies and house cleaning supplies?

If you increase the rent and add some of these expenses, you will be so far negative that the internet and entertainment expenses won't matter.

If your overtime is temporary, you probably should not include it at its current level. Average what you expect to earn over the next 3 years.

Again, please consult with attorneys even if you are going to file pro se. Bring your list of expenses and tell them you are worried about Schedule I/J and see what they suggest.

[LadyInTheRed]

The National standard for food for a family of 4 is $765. Raise yours to $750 and you'll still be conservative. You are under on other standards too: http://www.justice.gov/ust/eo/bapcpa..._standards.htm

[astroboy]

Ok, how do these numbers look?

schedule I

wages: 3310

taxes:260
benefits:354
Contribution to health savings account: 100

take home pay: 2596

spouse: child support from previous marriage 303

total before OT: 2899
estimated overtime:400
total with OT: 3299


Schedule J

rent: 800
elec: 100
water: 100
tele: 100
misc: internet: 50
haircuts: 50

food: 700
clothing: 200
laundry: 50
medical and dental: 100
recreation: 75

auto ins: 125
gas: 275

car payment: 355
pet food and supplies: 50
diapers: 50

total expenses: 3180

income left over: 119



Some questions: If Schedules I and J are supposed to be forward looking, for after bankruptcy, am I going to have to prove any of these expenses? Obviously if anything in my situation changes the number will change too. (If I get a raise at work, or find a better job, etc.)

Also, if i work more OT in the short term than I have listed on Schedule I will that be a problem?

[Pizza]

Try to get down in the negatives for DMI.

Shampoo, Soap, Toothpaste, band-aids, paper towels, TP, light bulbs, housecleaning supplies/chemicals, holiday presents, maintenance budget... think hard. You're an under the median Ch7. There is no 'budget police' after you're through, just show reasonable expenses and you'll be fine.

Do an Excel spreadsheet. Use Walgreen's prices. Don't be afraid to maximize the 'other' category, with your spreadsheet as a supporting document.

[astroboy]

Now I'm really confused. How is it actually possible to have negative DMI? How can I spend money I don't have? It's not like I can live off of credit anymore. Logically I would like that having a negative DMI would look bad to the court. Isn't it proof that you still can't manage your money even after bankruptcy? Also, in the NOLO chapter 7 book they say that a judge will not approve a reaffirmation if you're negative? Is that true?

Thank you all so much for your responses.

[Pizza]

Your goal is not to appear frugal but to appear insolvent. When you file Ch7 you want to prove that you can't afford a 13 plan. You maximize what is reasonably necessary so that your 'iffy' expenses such as recreation and cable internet become a non-issue.

If you're below the median then it is usually not difficult for your expenses to exceed your income. Having some money left over each month that could fund a 13 plan is what would "look bad to the court".

Also, in the NOLO chapter 7 book they say that a judge will not approve a reaffirmation if you're negative? Is that true?

I think you're reading about negative equity.

[keepsmiling]

Don't be in such a rush to reaffirm the car either. We can talk more about that later

[Pizza]

Isn't it proof that you still can't manage your money even after bankruptcy?

Stirring on this a little more:
Think of the amount on your schedules as the amount of money you're allowed to spend and save in lieu of your payments to creditors. It's an expense ceiling that is used to show that you cannot afford to repay your debt and budget for your needs simultaneously. Once you receive your discharge, you budget as you wish.

I know in a world where common sense prevailed this would sound screwy, but BK is mostly a game of numbers. An experienced lawyer should be able to guide you through this part with ease.

[astroboy]

Don't be in such a rush to reaffirm the car either. We can talk more about that later

I found an article on centraldistrictinsider.com talking about the 9th circuit and ipso facto clauses.

Is this what you're referring to?

I'm really not worried about not making payments though, I've never even been late. Losing this car would be devasting to my family, way worse than being on the hook for the rest of the loan. It'll be paid off next summer anyway.

[LadyInTheRed]

Now I'm really confused. How is it actually possible to have negative DMI? How can I spend money I don't have? It's not like I can live off of credit anymore. Logically I would like that having a negative DMI would look bad to the court. Isn't it proof that you still can't manage your money even after bankruptcy? Also, in the NOLO chapter 7 book they say that a judge will not approve a reaffirmation if you're negative? Is that true?

Thank you all so much for your responses.

Your confusion is exactly why you should at least consult with a couple of BK attorneys before you file. Most BK attorneys give free consultations. The quality of the consultations will vary, so you may need to meet with several attorneys.

[astroboy]

The lowest rental allowance for a family of 4 in California is $1,306 in Trinity County. You don't plan on living with family forever, right? If I were you, I'd figure out what a modest but more reasonable rental would cost for my family size and use that. Schedule J should be forward looking.

Yes, the whole plan is to get my debt wiped and start rebuilding credit so I can move my family out into our own place. Obviously that will be more expensive than my current payment of $500 a month. So when you say Schedule J should be forward looking, am I basically saying to the trustee/court "according to my family size, income, and IRS guidelines I'm "entitled" to be paying $X a month in rent, food, etc." so even at the monent my actual current expenses are less than that?

[Pizza]

Yes, the whole plan is to get my debt wiped and start rebuilding credit so I can move my family out into our own place. Obviously that will be more expensive than my current payment of $500 a month. So when you say Schedule J should be forward looking, am I basically saying to the trustee/court "according to my family size, income, and IRS guidelines I'm "entitled" to be paying $X a month in rent, food, etc." so even at the monent my actual current expenses are less than that?

Your attorney should give a really long questionnaire to fill out, part of which includes a detailed analysis of what you could expect to pay for over the next year, and room for explanations. Mine was 3 pages long. The firm will review all the information you give them, contact you with questions/suggestions, and make out a schedule J. If a "surplus" comes out based on your input and you are below the median, the assumption will be that you haven't captured all of your expenses and at that point, you should be provided with further guidance to eliminate the surplus.

I will add that at the free consultations, attorneys would quickly crunch the numbers I brought in and had no trouble determining my eligibility for a Ch7 right then and there. If it's a borderline case, you should know before any $$ crosses a desk.