What your expenses tell the court…

One of the forms you have to submit to the court lists all of your monthly living expenses. It’s essentially your household budget for life after bankruptcy.

The US Trustee’s Office is tasked with making sure that folks aren’t abusing the system and filing Chapter 7 when they can actually afford to pay at least some of their debts. They tend to pay close attention to expenses for clothing, food, recreation, and similar discretionary items. 

For example, if a single 27-year-old man in good health spends $200/month on clothing, $500/month on food, and $300/month on recreation, the US Trustee’s office may raise an inquiry to find out whether the expenses are reasonable under the circumstances. After all, even just cutting all of these expenses in half would mean $500 per month (or 69,000 over the span of 12 months) that could otherwise be used to pay down their debt. 

What does this mean for you? 

All of the information on your forms needs to be truthful, so ultimately, it is what it is. Sometimes it’s hard to remember every little expense you pay. That’s ok, there are some ways you can job your memory so can be sure you’re not forgetting anything: What should I do if I don't perfectly remember my expenses? But, it is important that you carefully review your spending on these discretionary items and use a realistic estimate on your bankruptcy forms. So, estimate but don’t guess.