Chapter 7 Question - Expenses

[swirlz89]

Hello,

Looking for advice, as I have already met with 5 lawyers and explained my situation, yet despite them all confidently saying I qualify for Chapter 7, I feel like it is either too good to be true, I’m not understanding something, or I’m being setup for failure.

34 y/o, working full time and have a small business online. I make $3,600/month in gross all together. My full time job provides me with an apartment and covers utilities, so I don’t pay rent or anything like that. I started my online business last year, so I could get out of a debt for two credit cards and a private student loan. However, early January there was big issue with shipping and as I waited for insurance claims, took out pay day loans just to stay ahead. Claims were all denied and ultimately despite showing proof and everything else, I was SOL and now with payday loans, then doing cash advances to stay ahead. Tried national debt relief for 3 months, and drowning. Further back then when I started, and yea.

So I had consultations with 5 lawyers, and even with me explaining I don’t pay rent or utilities, they said I was easily qualified for chapter 7 due to not having assets. I’ve always lived with little. I’ve looked at the 122-A1 form, and understand how they see that and I even felt confident. But I like to understand processes, understanding I’m not lawyer and don’t know everything, I was looking at various forms since ultimately I would need to sign and attest.

my confusion comes when I’m looking at the 106J form- I don’t have rent, or utilities, and in two months my vehicle lease is up and won’t have vehicle or insurance ($367), but where I live I plan to get bus pass, and plan to rent a uhaul truck or van for the 1 week a months I actually need a vehicle (I am not ashamed to look stupid driving in one), which does add a bit extra in expenses based on pricing it all out.

sure not having the debt would allow me to go to therapy twice a month like I should be, to finally go to the doctors, hell even the dentist. It would allow me to buy groceries instead of going to the food pantry in town. To finally go back to the gym. My physical and mental health has really been hit by all this debt, so finally being able to pay for basic things sounds great. But I feel guilty, probably ashamed more than anything, that debt is cleared just for me to pay for these basic things and adding them to expense sheet feels like I’m just buffing it to get through the test. I need it, but it feels wrong when I’ve been under all this debt for so long. It would certainly enable me to get the service dog I need for my disability. But what trustee is going to believe me that I need therapy twice a month, doctors, and paying for service dog when I have gone so many years trying to get to this point.

when I say afford, please note I’m not saying I can splurge and go out to fancy dinners, I do truly mean just having a decent minimal life. But when I haven’t been able to consistently pay for these things even in the last year, how can I possibly feel like a trustee or judge will see it as valid and not just me trying to lie. The way I read the form it’s my current expenses, not what I plan to live off. I could say all I could in speaking truth, but pen to paper, I don’t have much to back it up. I acknowledge my PTSD is probably setting off alarms that don’t need to be there, and I’ve been in such a bad place that to see a light at end of tunnel is probably just scaring me more than needed, especially since multiple lawyers have said they don’t see a problem with my case.

I just need someone to tell me what questions I am forgetting to ask before committing to a lawyer and putting money out the door that could better be used elsewhere. Is 106j just for current expenses, or actual life expenses I plan to have consistently after being out of debt to live better /basic life.

34 y/o, single, 3,600 gross
Renters Insurance: $20
Utilities (Internet, Cell, cable): $289
Food: $800
Clothing/Laundry: $60
Personal Care: $50
Medical /Dental: $500
Transportation: $255
Entertainment: $250
Insurance: $60 Pet
Other: $300 (Student Loans)

Deductions from Paycheck: $812

Leaves me with net of around 200. Food and medical includes dog food and vet costs (have a ESA already). That 200 a month would be great to put towards service dog, and I could certainly cut down on food and entertainment to put towards service dogs some months.

[PoorlyFunded]

I JUST met with an attorney today to go over my situation, and even though I have all the expenses -- rent, all that -- he was cautiously optimistic.

When he saw my food budget ($600) and my pet budget ($200 -- insurance + care plan), he said a trustee likely wouldn't go for either. Then he said my entertainment budget ($500) was insanely too high.

Basically, I was told that food should be $200-300, pets $100, and entertainment $100-150. I really don't know, man! I mean, they'll know better than we do whether we'll qualify. (Also: How will you quantify medical/dental? Do you already have treatment plans and/or cost estimates?)

[justbroke]

You can look at the UST Mean's Testing site to get an idea of the allowances.

For a single-person household, food is $458/month. You also get $44 for housekeeping, $87 for clothing (and services), and some misc items. A pet budget is going to be difficult unless you can convince someone that this is a service animal, not a pet. The Trustee will likely argue over the insurance. The total for Food, Clothing, and Other Items is $808/month allowance for a single-person household.

Your entertainment is insanely high. While entertainment is not listed on the UST Expenses, most Trustees allow only $50/per person in a household. Sometimes they'll let it go to $100/month per person with a reasonable explanation.

But, overall, you are below the median income and that may not get the UST interested in your case. The biggest thing that stands out to me is that you have no housing expense (your housing is provided by your employer). Whether that is enough to get the UST interested in pushing this to a Chapter 13 or dismissal is anyone's guess. That is why your attorneys are "optimistic" about your case as a Chapter 7.

Usually an under-the-median income filer has no issues because their expenses usually gobble up so much that there is nothing left. Even if such a filer had $250/month in disposable monthly income (DMI), it may not pique the UST's interest. But having $500-$1,000 month in DMI may be enough. That amount is significant over 36 months ($18,000-$36,000 to unsecured creditors). This is likely why your attorneys are "cautious" and optimistic at the same time.

Source: Executive Office of the United States Trustee: Means Testing - https://www.justice.gov/ust/means-testing