When consumers moving forward with filing for bankruptcy must be prepared to estimate expense in bankruptcy as part of the filing process. You see the actual bankruptcy petition will ask you to provide all of your current income and expenses. Although this can vary from month to month, it is best to estimate your current income and expenses as best you can on schedules I and J of the bankruptcy petition. This is required by all debtors who file for bankruptcy and it can also be noted whether you expect an increase or decrease soon after filing for bankruptcy in your income and expenses.
If you decide to contact a bankruptcy attorney and move forward with filing a bankruptcy filing, you will be asked to fully disclose all of your financial information, including your last 6 months of income and your average monthly expenses. This is typically done by providing your attorney with your last 6 months of paystubs or a profit and loss for a business if you are a sole owner. Your attorney will use this information to prepare your bankruptcy schedules and it is up to you to inform your attorney or the court if there will be any changes in the near future. Therefore while you can estimate your expenses in bankruptcy, you should try to be as accurate as possible in case there is an audit and you are asked to prove your income or expenses. A bankruptcy audit does not happen very often and if done is conducted by the US Trustee who oversees all bankruptcy cases. In my experience an audit is more likely to happen in cases where a debtor is above the median income for their family size and trying to pass the means test referenced below.
If you are somebody who may be borderline as to whether you will qualify for a chapter 7 bankruptcy based on your income over the last 6 months prior to filing and your family size or need to file a chapter 13 bankruptcy, having additional expenses in the areas of medical, child care or taking care of other family members outside of your home may have a big impact on what is called the means test. These additional expenses will also affect how much you spend per month in a chapter 13 repayment plan. For instance the government on the means test allows for a standard deduction of $60/person in medical expense. However if your family spends closer to $200/person due to a medical condition that is money that could be deducted from your monthly payments and help you get into a chapter 7 bankruptcy instead of a chapter 13 bankruptcy. Therefore as a bankruptcy attorney, I always try to get debtors the lowest payments possible in a chapter 13 plan that could last for 5 years or squeeze them into a chapter 7 which has no payments and could last for a little more than 90 days, however full disclosure will go a long way in helping to determine whether what type of bankruptcy will be likely to be approved by the bankruptcy courts and the US Trustee.
If you live in Washington State and have additional questions about whether you can estimate your expenses in bankruptcy please contact Symmes Law Group at 206-682-7975 or contact us to schedule your Free initial consultation with a debt relief attorney.
