Time Spent Preparing Your Bankruptcy Budget is Time Well Spent

[CATCHMEIFYOUCAN]

http://thebklawyer.com/thebkblog/2006/11/04/time-spent-preparing-your-bankruptcy-budget-is-time-well-spent/

November 4, 2006
Time Spent Preparing Your Bankruptcy Budget is Time Well Spent
Requests for documents and records by Chapter 7 trustees at 341 hearings are now a fact of life in the consumer bankruptcy world. No longer will standing Chapter 7 trustees rely on a debtor's best estimates - everything in your petition is fair game for review.

I am now telling my Chapter 7 clients to save their receipts for every purchase they make. Food, out of pocket medical bills, transportation expenses (including gasoline and routine maintenance), utilities, insurance costs and school sports expenses for the kids seem to be the categories that attract the most attention by trustees.

You should assume that some poor soul in your trustee's office will have the task of comparing your receipts to the figures on your filed budget (Schedule J of your petition).

If at all possible, you should start collecting receipts far in advance of filing. If it turns out that your receipts show that you actually spend $200 or $300 less each month than you think, you may find yourself facing dismissal or a conversion to a Chapter 13.

Your need to provide receipts is especially important if your household income exceeds the median and we have to run your budget through the means test. Every means test case is scrutinized by both the Chapter 7 trustee assigned to your case and the United States trustee. As I have reported before in this blog, the United States trustee is looking for a reason to push you out of Chapter 7.

I advise my clients that while I will argue long and loud on their behalf, numbers do not lie. And if I have to spend several hours poring over receipts, meeting the the U.S. Trustee, and arguing a 707 Motion to Dismiss, they can expect to spend a significant sum of money for attorney's fees.

The time to get your attorney detailed information about your spending habits and records of what you actually spend is before you actually file. I realize that this type of planning is not always possible, but if you can prepare in this way, you will save yourself a great deal of aggrevation and probably save yourself money as well.

QUOTED FROM THEBKLAWYER.COM blog !

CATCHMEIFYOUCAN

[riverlady]

great post! thanks

[FoolAndHisMoney]

The only problem that makes this difficult is actual expenses in the months prior to filing are usually less then normal for someone trying to save the money for an attorney. If you saved $1600 over the prior 6 months for filing fees and lawyer fees then the trustee will see that you have over 250 per month available since you don't actually spend this on food and clothing when all you really did was stay home and eat cheap and wear older clothes.

I don't think the trustee has anyone in their office comparing receipts with schedule J expenses. The trustee would have nothing to gain by doing this. They don't get paid to convert someone. They just want assets. The us trustee may do this.

[GoingDown]

Overall, very good advice.

I pay for almost everything with cash and money orders, and I always save the receipts and the stubs that came with the money orders in case I need them later on. And I have them organized by month and year, so I'm all set in case someone demands to see what I spent in a given month.