- Author: George Haines
- Published
During the bankruptcy process, the debtor is asked to account for all monthly expenses on bankruptcy Schedule J, which includes categories such as food, clothing, mortgage/rent, medical, and transportation. However, Schedule J is neither complete nor exclusive. Everyone spends their money differently, and bankruptcy judges are often called upon to decide whether an expense is reasonably necessary for the maintenance or support of the debtor and his dependents. “A determination of reasonableness of a debtor’s expenses requires the Court to make a value judgment.” See In re Ashton, 85 B.R. 766 (Bankr. S.D. Ohio 1988).
Smoking is an expense that can elicit value judgments by the trustee, and sometimes an objection. The trustee’s objection to an expense for cigarettes is always that it is not a reasonable or necessary expense and the money should otherwise be used to repay creditors. Some attorneys refuse to list the expense and instead conceal it by inflating other categories of expenses, like food or recreation. In areas where the bankruptcy court will not allow the expense as “reasonable and necessary,” there is good reason to manipulate the expense schedules.
Most bankruptcy courts have declined to adopt a per se rule that smoking is not a reasonable or necessary expense. See e.g. Evergreen Credit Union v. Woodman (In re Woodman), 379 F.3d 1 (1st Cir. 2004). Generally, “[t]he debtor’s expenses should be scrutinized only for luxuries that are not enjoyed by an average American family.” See In re Woodman, 287 B.R. 589 (Bankr. D. Maine 2003), aff’d 379 F.3d 1 (1st Cir. 2004). One bankruptcy judge discussed the matter this way:
Too many courts have fretted over whether a debtor’s budget should include an allowance for cigarettes or whether the debtor is driving too expensive of a car. Far more important is consideration of what is to be the fair division of a debtor’s future income between his creditors and himself. A debtor should not be permitted to live extravagantly at his creditors’ expense. However, it should be up to the debtor to decide how he spends his share once the appropriate allotment has been made. For example, a debtor should not be prohibited from smoking provided the debtor makes compensating adjustments elsewhere in his or her budget.
In re Mars, 340 B.R. 844 (Bankr. W.D. Mich. 2006). Consequently, some courts have disallowed a cigarette expense when the amount is determined as excessive. See In re Peluso, 72 B.R. 732 (Bankr. N.D.N.Y. 1987); In re Hudson, 64 B.R. 73 (Bankr.
N.D. Ohio 1986). In most jurisdictions, there is no hard and fast rule against listing cigarettes as a monthly expense. The debtor should recognize that this is a “hot button” issue which may draw an objection from the bankruptcy trustee, especially if the expense is unusually high for the area.
The bankruptcy court will not make you quit smoking, but a smoking is a monthly expense that should be discussed with your bankruptcy attorney. Your attorney can help you structure your schedules in a way that will avoid objections and difficulties in your case.
