Bankruptcy

How to file bankruptcy #9 of a series ? Allowances

By David Leibowitz, Illinois and Wisconsin Bankruptcy

So we’re still looking at that creation of Congress – lovingly known as form B22A.

Once we calculate your “current monthly income” and we compare it to the “applicable median income”, we know whether your chapter 7 case is presumed abusive.

You can overcome the presumption of abuse if you have enough expenses to leave you with insufficient disposable income to fund a chapter 13 plan.

Today, we discuss “allowances.”  Here are some allowances you can use to reduce from your income:

• an allowance depending on how many family members you have
• additional allowances if you have a family member over 65 years of age
• housing and utilities – non-mortgage expense – per local standards in IRS manual
• average monthly mortgage payment (no double dipping here against the allowance above)
• vehicle operation expense
• public transportation expense (if you actually use it)
• vehicle ownership costs (local standards) (some courts think this applies only if you have a car with a lien on it and then make you reduce your monthly car payment – other courts disagree) (think you can figure this out without a lawyer??)

These are fixed expenses for the most part – your mortgage payment is the only item here which might be variable. Think you’re done?  Hardly.  Once we figure out allowances, we next have to consider deductions.

Tomorrow.

Full post as published by Bankruptcy Law Network on March 19, 2010 (boomark / email).