Listing Your Living Expenses During Bankruptcy
Part of the court’s job during the bankruptcy process is to determine what debts to discharge (Chapter 7 bankruptcy) or how to restructure your debts (Chapter 13 bankruptcy). As the court moves through this process, they must ask several questions regarding the debts of a person attempting to declare bankruptcy as well as the assets that they hold. One of the other questions that they must ask regards the basic living expenses of the debtor (the person filing for bankruptcy). The following guide will help you determine what the court is looking for with respect to listing your basic living expenses.
Basic Living Expenses
As a debtor, you have basic living expenses that need to be taken into account to help the court make a determination regarding the discharge of your debts. The following basic living expenses will be submitted to the court on a special form, and you should consider including the following:
- Mortgage Payments or rent
- Utilities (Gas, Electric, Trash, Water, etc.)
- Cell phone
- Home maintenance costs
- Food and clothing
- Laundry and/or dry cleaning
- Medical expenses
- Dental expenses
- Transportation expenses (including car insurance, maintenance, registration fees, or public transportation costs)
- Child Support
- Child expenses (including childcare, education costs, activities, books, entertainment, clothes, etc.)
- Recreation expenses (including entertainment, magazines, etc.)
- Charitable contributions
- Disability or life insurance
- Farm expenses (if applicable)
- Business expenses (if applicable)
- Education expenses for yourself or your spouse
- Miscellaneous personal expenses
It is important to note that simply because you list an amount a living expense, it is not necessarily guaranteed that a judge will deem it to be part of your basic living expenses. For example, a judge may require that you limit your amount of recreational expenses or suggest that you obtain employment instead of going to college during this time. However, never let this dissuade you from being accurate and truthful as you disclose all of your basic living expenses to the court.
Purpose of Listing Living Expenses
One of the most important purposes of listing your living expenses for the court is that it helps determine what your “disposable income” is for purposes of paying back debt in a Chapter 13 restructuring bankruptcy, or justifiably eliminating and discharging your debt in a Chapter 7 bankruptcy. If your living expenses are justifiable and clearly indicate that you would be unable to repay debts in either a Chapter 13 or Chapter 7 bankruptcy, the court can make decisions that will help your financial position. However, the court will not look kindly on a debtor attempting to say that certain living expenses are necessary (movies, magazine subscriptions, etc.) when they clearly are not necessary to actually live.
Let Us Help You Today
Visiting with an experienced bankruptcy attorney can help you understand this bankruptcy paperwork, and help you determine what you should, and should not, list as your living expenses to the court. If you are considering bankruptcy, or are in the process of bankruptcy contact the West Palm Beach bankruptcy attorneys at Kelley, Fulton & Kaplan at 561-264-6850 for a free consultation to help you understand the bankruptcy process, and help you fill out all of the necessary forms correctly.