Atty consult - wouldnt allow IRS standard amounts on Schedule J???

[Avand18]

Consulted with a potential bankruptcy Atty today... He is a big name in my area and has 30+ years exp.

He claimed he knows all the ins and outs of BK but...In order to see which BK we qualified for he filled out a mockup schedule j - and wouldn't allow my wife and I to put IRS standard expenses. Having done my basic reading I thought "Is this guy a dumbass?" For example he wouldn't let us put more than $500 in food for 2 people and operating costs of 2 vehicles with liens couldn't exceed $200 which is well below standard! The tables in federal law clearly state what the allowances are and are supposed to be incontestable by the UST! The kicker is, he wanted us to consider coming way up on medical bills from $100 to $500 per month which we could never justify with evidence.

Has anyone here ever dealt with anything like this?

[LadyInTheRed]

Sounds odd. $500 for food for two is tough. My medical expenses ($250 for 2) was the one thing my attorney told me I should be prepared to document, but I didn't have to.

Perhaps the attorney knows something about your local trustee. Remember, the allowable expenses are for the means test. There is nothing that says your schedule J expenses can't be challenged if they do not exceed the standards allowed on the means test. But, the general consensus here seems to be that if you don't exceed the allowances on Schedule J, you won't be questioned. That said, the trustee is entitled to ask for evidence of your expenses. If the trustee really will accept $500 in medical expenses but only 500 for food,the high medical expenses more than makes up for the low food expense. Nobody's going to check to make sure you stick to your budget later. But, it still seems odd to me.

Consult with a couple other experienced BK attorneys and find out if they give the same advice.

[keepsmiling]

Seems odd. Are you a borderline case?
Regardless of what he says, you need to set up some other appointments and see what the other attys say.
Come back and let us know. Good luck!

[keepsmiling]

gmta

[LadyInTheRed]

gmta

[Avand18]

Yeah we're a borderline case. We fall into that category where there's really no joint income because my wife can't work anywhere with fluorescent lights. And student loans can't be counted at minimum as an expense??. Yet somehow we make too much money for a BK7 but all the bills get paid late and there is never any money for food supplies or gas. I could work enough overtime to keep "abreast" but our marriage would fail. God forbid any emergencies come up because it wouldn't get paid for.

[LadyInTheRed]

The reason student loans aren't counted as an expenses is because they would go into deferral during a Chap 13. Your eligibility for a 7 is based on whether after paying your living expenses, you can still afford to pay something to unsecured creditors. Just because you are struggling to pay all your unsecured debt and living expenses before you file, doesn't mean you qualify for a 7. You said in a another thread that you have $4500 in disposable income. That will keep you out of a 7.

[Avand18]

[Apologies.. That statement about the $4500 per month income would be false for 2 reasons: a) because like many people, I did not yet understand the significance of projecting true expenses with "ideal + reasonable scenarios" on Schedule J and b) we discovered that my wife's business sales were much worse than thought in 2011, dropping us to about $4000 per month.]

That student loan thing is a whole other animal in itself (see my Student Loans board thread)...

Ultimately what really makes this a borderline case is that neither a 7 or a 13 would really do anything except give us an open door to more consumer debt, so in the end I don't even care which happens. The only fresh start would be not to have to throw away money on current CC bills. And the weirdest thing is, we have nothing to show for the CC debt. I don't even know where it came from! We have base model commuter cars, basic furnishings and appliances, a whole bunch of rooms without ceilings baseboard or trim, and a gutted 2nd bathroom - all in a house that sold for 60% of what others its size and age did. The only hope for savings I guess is letting my 401K stagnate so I can put that 2% of each pay into my savings account instead - as I suppose any interest gain there is better than a -13% return for 2011.

I do think we can get our numbers into a 7 simply for the projected necessities of getting caught up on medical appointments and fixing things like a settled porch slab that's letting water leak over the basement walls (mold and structural safety hazards) and bad gutters up front (structural safety).

I guess the moral of the story here is that we should just believe in what we're doing because as a no-asset case the trustee would just want to know that we're firm on where we stand and move onto the asset cases.