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How do I come up with this budget you want me to fill out?

You need to sit back, take a breath, and think. Think about what you are doing. A budget is supposed to be a list of what you make and what you are reasonably expected to spend in an average month. Average means that some months you spend more, some months less. You are completing the budget on which you potentially could be living for the next five years if you are filing a chapter 13 bankruptcy. It is to be truthful, yes, and you are filing it with the court under penalty of perjury, which means you better not be lying or you could be sentenced to prison or fined, or both.

However, you are not being realistic if, for example, you do not put anything for clothing because you haven’t been able to spend money on clothes in a long time because you’ve been paying VISA all your money so its collectors would quit calling you. Figure up what you need to spend to keep you with an adequate supply of reasonable quality clothes, taking into account special work situations, winter clothing, children outgrowing clothing, children that are on the way, children that will leave home in 3 months, etc.

In short, be realistic. An example that I use is regarding medical/dental expenses. If you say Zero, but your teeth are rotting and you and your kids never go to the dentist, then you need to figure what it would take for you to go the recommended twice a year dental checkups and, if you are the type who has a cavity every year no matter how well you take care of your teeth, then you need to figure the cost of that, too. Otherwise, you will lose your teeth and get infections from the abscessed teeth. For me, I go to the emergency room every other year to pass a kidney stone. I should factor the cost of that visit, divided by 24 months, into my monthly budget.

Keep in mind that the budget is to be reviewed by me, who will tell you if it is ridiculously high or low in some areas and that you will sign it under penalty of perjury. Then, when it is filed, at least one lawyer or paralegal at the United States Trustee’s office or Bankruptcy Administrator’s office will review it for abuse. Then your bankruptcy trustee will review it for abuse. Finally, if one of those parties thinks it is abusive, a United States Bankruptcy Judge will decide whether it is abusive. You may have to prove that you have certain expenses or at least that you need to have them and that that need is necessary and the amount is reasonable. Of course, starting October, 2006 every 1/250 cases filed will be audited by the United States Justice Department looking for abuse and fraud.

Problems with budgets are rare when debtors have an attorney and provide their attorney with what he needs to help produce the finished product.

HOWEVER, DO NOT PANIC IF MY OFFICE CALLS YOU FOR AN APPOINTMENT TO DISCUSS YOUR BUDGET BECAUSE WE THINK YOU HAVE A BUDGET PROBLEM. THE PURPOSE IS FOR US TO DISCUSS DEFICIENCIES OR OVERRAGES IN YOUR BUDGET AND THAT IS PART OF WHAT MY OFFICE DOES. HOWEVER, FOR SOME FOLKS, IT MAY MEAN A CHANGE OF STRATEGY.

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  • Can I go to Jail for not Paying my Bills?

    No, not unless you committed a crime in the creation of the debt (for example, fraud). Simply borrowing money and not being able to pay it back is not a crime. Many creditors representatives will tell you lies on the telephone and say that they will have you put in jail. Perhaps they are too ignorant to know they are wrong or that it is illegal for them even to say that. See More Bankruptcy Q&A