Determining Income & Expenses

Determining Replacement Value of Your Personal Property

You will need to know the replacement value of any personal property you own when your bankruptcy case is filed. The replacement value of property you acquired for a personal, family or household purpose is the price a retail merchant would charge for property of that kind, considering the age and condition of the property at the time you're filing. The value of personal property that is subject to a valid lien or mortgage is the replacement value of the property as of the date the bankruptcy case is filed without deducting anything for the cost of selling or marketing the property.

Determining Monthly Expenses & Disposable Income

If the amount of your current monthly income multiplied by 12 does not exceed the median annual family income for your state and household size, as determined by the U.S. Census Bureau, then you will not be subject to means testing and you will not be required to calculate your monthly disposable income.

However, if the amount of your current monthly income multiplied by 12 exceeds the median annual family income for your state and household size, then the deductions from your current monthly income must be determined in order to define eligibility to file.

Many of these deductions are not the amounts you actually spend each month, but the amounts calculated by the Internal Revenue Service (the IRS) as being the standard allowable monthly living expenses for a household of your size and income level. These expenses include food, clothing, household supplies, personal care and similar expenses, housing and utility expenses, mortgage or rent expenses, transportation expenses, and other necessary expenses including taxes, payroll deductions, life insurance, child or spousal support payments, education, childcare, healthcare, and telecommunications.

There is also a national standard expense for out- of-pocket health care expenses for members of your household. These standard expenses are listed on a Government website. Once we know your household size and the amount of your current monthly income, we will obtain this information for you.

In addition to the IRS standard expenses described in the paragraph above, you are allowed to deduct the average monthly amounts you actually spend each month for

1. health or disability insurance and health savings account
2. reasonable, necessary care and support of an elderly, chronically ill or disabled member of your household or immediate family
3. protection against family violence
4. regular charitable contributions you will continue to make after bankruptcy is filed

In addition, if you can prove that your average monthly home energy costs, allowances for food and clothing or other expenses exceed the amount specified in the IRS standards or are reasonable and necessary, you may deduct a portion of those expenses up to a certain amount specified by your case. In order to be able to deduct the actual expenses described in this paragraph you must provide the bankruptcy trustee with documents proving you actually incur these expenses and spend these amounts. Statements, bills or receipts from utility companies, food and clothing providers, and educational providers should be obtained so they can be given to the bankruptcy trustee. As indicated above, the total of all of your standard and permitted actual monthly expenses will be subtracted from your current monthly income to determine your monthly disposable income.

Determining Creditors and Debt

When a bankruptcy petition is filed, complete lists of the names and addresses of all of your secured creditors and unsecured creditors must also be filed. We will prepare and file those lists for you. However, to prepare the lists properly we will need to be provided with the name, address and account number (if one exists) of each of your secured and unsecured creditors. The names, addresses and account numbers of your commercial creditors may be obtained from the bills or statements that they send to you. Commercial creditors include banks, credit card companies, loan companies, stores, and other persons or companies that have extended commercial credit to you and have not been paid in full. The address that should be listed for each creditor is the address to which payments to the creditor are sent. If the account has been assigned to a collection agent, the name and address of the collection agent should also be listed. The names and addresses of any creditors who are not commercial creditors must also be provided to us.

Included here are creditors who are relatives or business associates, child or spousal support creditors, and persons who may have claims against you for any reason, including automobile accidents, contract or rent disputes, and business disputes. We must also be informed as to whether each debt is secured or unsecured. If a joint case is being filed we must be informed as to whether each debt was incurred by the husband, the wife, or jointly by both husband and wife. We must also be informed of the current amount owed to each creditor. For commercial creditors this amount can usually be obtained from the most recent bill or statement. If it is not clear how much is owed to a particular creditor, we will assist you in determining the amount that is owed.