The Bankruptcy Code requires the debtor to file an accounting of average monthly personal and business expenses. The total monthly expenses are compared to the total monthly net income as one indication of the debtor’s ability to repay debts. Consequently, it is important to accurately identify all monthly expenses or risk complications in your bankruptcy case.
Fixed expenses, like a car or house payment, are easily identified. The same goes for variable expenses, which can be averaged over a six month period. These expenses include utility payments or transportation expenses. Discretionary expenses, like entertainment, clothing, and food are usually under-estimated. However, the category most overlooked is annual expenses. This category includes doctor co-pays, home owner association fees, and property taxes. It is recommended that the debtor review records and make an estimate based on a yearly average.
Below is a list of expenses you may not think about when completing your bankruptcy paperwork:
Salon/hairdresser or barbershop
Shampoo, conditioner, toothpaste, personal care, etc.
Regular inspections and maintenance
Health / Medical
Glasses and visits to optometrist
Contact lenses and solutions
Co-pays for prescriptions and office visits
Prescriptions and over the counter medications, allergy remedies, aspirin
Dependent Care Expenses
Diapers, formula, day care
Annual school expenses, books, backpacks, etc.
School uniforms, expenses for sports
Summer camps, childcare in summer
Home Care and Maintenance
Lawn care or snow removal
Computer supplies, paper, ink refills, toner cartridges
Home alarm fees
Bank charges (monthly checking account fees, ATM fees, etc.)
Tax preparation fees
Legal or accounting fees
Pet Care Expenses
Heart worm or other medications
Annual pet license fees
With your input and assistance, your attorney can help you identify expenses and structure your bankruptcy schedules to avoid complications in your case. Bankruptcy is a powerful legal tool, but it requires a joint effort from you and your attorney to achieve the best result.