Income and Expenses Questions

[evilspark]

Hey all! I'm getting ready to file BK sometime this month, but am a bit unclear.

First off, I've bought (and read) the NoLo Book. It felt like a complete waste of money to me, most (if not all) mentioned in the book has been answered on this site.

My question comes about Income and Expenses.

Income - I've already done the Means Tests, and I was under the limit. Woohoo!

On the Schedule for Income, it asks the current month. If I file on the 20th, will it mean for the month of April or does it mean 30 days from filing date.

My MAIN question is expenses

I live with my mom (not really my choice), and I had a question about preferential payments.

I pay $500 for rent, $120 for car insurance and $60 cell phone to her.

The rent is obvious why I'm paying her
The insurance is because I occasionally drive her cars
The cell phone because I couldn't get a cell phone through anyone.

I don't know if they would see that as a "preferential payment" but I've never filed BK so I'm not clear on that. All "preferential payment" advice I've seen online is about if you owe your parents money from a loan and you pay them back first. My expenses are legitimate, but I don't want the trustee saying "that isn't correct"

Most of paychecks were just cashed at a Check Cashing Place. For the past month or so, I got a bank account and have been depositing through there. Are there going to be any issue?

Thanks for the help! I don't have the $$ for a lawyer!

[AngelinaCatHub]

No. I think you did well. You are paying reasonable bills. Have Mom make sure to give you a receipt or pay her by check or any other paper trail. If your rent was 50 bucks and the going rate of rent was 1000 then it may be questioned. However, 500 a month to Mom for a "room", is not unreasonable. So you do have kitchen privileges, so what? 120 insurance is not bad. We pay 155 for two cars one full coverage. 60 bucks for a cell is a bit high in my book so you are not out of line there. You will do just fine but get some paper on it anyway. 'Hub

[evilspark]

No. I think you did well. You are paying reasonable bills. Have Mom make sure to give you a receipt or pay her by check or any other paper trail. If your rent was 50 bucks and the going rate of rent was 1000 then it may be questioned. However, 500 a month to Mom for a "room", is not unreasonable. So you do have kitchen privileges, so what? 120 insurance is not bad. We pay 155 for two cars one full coverage. 60 bucks for a cell is a bit high in my book so you are not out of line there. You will do just fine but get some paper on it anyway. 'Hub

You just made me feel about 1000x better!

My mom has been giving me receipts for every dollar I've given her.

My insurance is cheap because I'm just a "driver", not the main driver of any car she has.

$60 isn't bad, considering I have an iPhone and through AT&T it'd be around $130/month for the same thing I have (unlimited minutes/messages/data)

[justbroke]

Nothing you listed is preferential. It looks good to me!

[evilspark]

I've already "failed" the means tests, so I can file but another question

What happens if my expenses aren't up to my income?

My 6 month average is about $2200, while this month (April), should only be around $1100.

If I use April (I'm planning on filing around the 20th), I should be easily near my income. If there is a $100-$200 left over, will they force me into a Ch13? Padding my budget might be an option.

I have some dental work that needs to be done, and if I get it done this month, will the $ I spend go into my monthly budget?

[justbroke]

What happens if my expenses aren't up to my income? My 6 month average is about $2200, while this month (April), should only be around $1100.

It's always based on the average. The means test was designed to take into account fluctuations over a period of 6 months.

If I use April (I'm planning on filing around the 20th), I should be easily near my income. If there is a $100-$200 left over, will they force me into a Ch13? Padding my budget might be an option.

If you are filing around 4/20/2010, then you wouldn't be using April's income on your Means Test. You would use October, November, December, January, February, March as the 6 months prior to filing.

I have some dental work that needs to be done, and if I get it done this month, will the $ I spend go into my monthly budget?

No. Your medical costs are an average spent over a year. SO if you spend $480 on dental work, and that's the only medical all year, then your "cost" or budget amount is $40/month.

Do you even have a guidebook? The questions you are asking should already be answered in books like the NoLo guidebook.

[evilspark]

I'm not talking about the means test, I know the means test is the average over 6 months. I'm talking about Schedule I - Current Income

[justbroke]

I'm not talking about the means test, I know the means test is the average over 6 months. I'm talking about Schedule I - Current Income

It really makes no difference. The Means Test looks backwards, but Schedule I looks forward. Schedule I should be your "average" income with a slant to the future. (The means test is your average income with a definitive slant in the past... 6 months.)

You can't just put on your Schedule I, $1,100 dollars when that is not your average income. The Trustee will see that easily by looking at your paystubs, and this is the reason they want to see your paystubs. They also look to your tax returns as well to gauge whether your income is being reported correctly.

INCOME: (Estimate of average or projected monthly income at time case filed)

Do you have a guidebook?