Completing bankruptcy forms can be an exhausting process. It’s important to be diligent, however, in order to have your bankruptcy case go through as you’ve requested it.
One of the bankruptcy forms that is most important to giving your case weight is your list of monthly expenditures. This list is especially critical if you’re filing Chapter 7. On this form, you’ll be listing your monthly financial responsibilities outside of the debt that you’re trying to eliminate. The court wants to see how much disposable income you have left over after regular expenses that could be used to pay off your debt.
Listing Expenses
Reasonable monthly expenditures include:
- Housing – including a mortgage on a moderately priced home
- Car payments – on a moderately priced car
- Clothing
- Medical expenses
- Utilities
- Food
- Education
Once your monthly expenditures are determined, the court looks at money left over compared to the debt you owe. If it is not determined that you have enough money left over to pay off your debt in a reasonable amount of time, a Chapter 7 bankruptcy is likely to be approved. If, however, there is enough disposable income remaining, your case could be dismissed, or reduced to a Chapter 13 bankruptcy with a repayment plan.
The Don’ts
When you’re completing your bankruptcy forms, keep in mind some no-no’s that will flag the court that you have plenty of disposable income. There are some things that they won’t consider on your list of reasonable monthly expenditures:
- Investment property or second homes
- Luxury cars, or several cars
- Very high end homes
- Large allowances for clothing
- Large expenditures for food- such as calculating the cost of eating every meal in a restaurant
- Other luxury items
It pays to have receipts, particularly if the amount of your expenditures is very high. It is important not to appear to the court as though you’re trying to maintain a very extravagant lifestyle in the midst of bankruptcy.
Legitimate Current Expenditure Claims
Current expenditure claims are actually rather simple forms, at least conceptually. Your current expenditure form, referred to as a Schedule J, will detail your current and ongoing expenses. This form shows how much money you are spending and exactly how you are spending it.
The bankruptcy court needs to see how your money is being spent. Legitimate current expenditure claims will have what are deemed appropriate amounts of money spent on appropriate living expenses. If a rearrangement of your finances could serve to pay off your debt then bankruptcy may not be necessary. These forms just help to demonstrate that bankruptcy is necessary.
Is The Purpose Of Current Expenditure Claims Always The Same?
The purpose of current expenditure claims can vary depending on the type of bankruptcy you are filing for. Chapter 7 bankruptcies, for example, will use these forms to show that your income all goes to pay for living expenses. This is necessary because if not all the income is consumed by living expenses then the individual may have to file for a Chapter 13 bankruptcy. Chapter 13 bankruptcies have current expenditure claims that report expenses but in this case this form is meant to show that the individual filing for bankruptcy has the ability to make monthly payments to creditors.
Will Your Current Expenditure Claims Be Questioned?
Your current expenditure claims will certainly be questioned but as long as they contain legitimate expenses then you will be fine. What constitutes legitimate expenses can be difficult to determine as individuals often have a long list of expenses that they are not sure count as legitimate living expenses. And the figures for what is acceptable and what is not are not always set in stone so you will need some help both in determining what expenditures are legitimate and making sure that the legitimacy of those expenditures holds up in court.
