{"id":309,"date":"2014-06-04T15:06:05","date_gmt":"2014-06-04T23:06:05","guid":{"rendered":"http:\/\/www.lawyervictoria.com\/bankruptcy-attorney-blog\/?p=309"},"modified":"2014-07-22T14:04:32","modified_gmt":"2014-07-22T22:04:32","slug":"dictate-expenses-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.lawyervictoria.com\/bankruptcy-attorney-blog\/dictate-expenses-bankruptcy\/","title":{"rendered":"Does the court monitor or dictate your expenses in bankruptcy?"},"content":{"rendered":"

People often wonder if the bankruptcy court<\/a> will tell them how to spend money, or prohibit or limit any expenses. The short answer is, no.<\/p>\n

It is true that the bankruptcy court looks into whether the person has the financial means to make any payments to creditors, and requires information about the household\u2019s income and expenses<\/a> for this analysis.<\/p>\n

What if the household has no disposable income after paying for all living expenses each month, or there is not much left over? Then, generally, at least based on the results of this test, the court would say that creditors would either get nothing or low monthly payments.<\/p>\n

Here is a fairly common situation: a family is on a tight budget and spends modestly on pretty much everything, except for one or two things.<\/p>\n

For example, I met a mechanic who slept in a garage at work instead of renting an apartment, didn\u2019t travel, didn\u2019t buy anything big \u2013 but spent a lot each month on eating out. I also had a client who was a chain-smoker and who paid about three hundred dollars for cigarettes each month. As another example, there was a family that spent little on groceries, carpooled, drove a 20-year-old car, counted every penny \u2013 and sent their son to private school and off to participate in different sports.\u00a0 Another client had family that lived far, and she was planning to travel to see them at some point after filing bankruptcy. In each of these cases, the person was very concerned as to what the bankruptcy judge or trustee would think about these expenses. They asked\u2026.<\/p>\n

Would the bankruptcy judge tell you not to eat out, or smoke, or play sports, or send your kid to private school, or prohibit you from traveling to see family?<\/p>\n

Would the judge say that instead of paying for cigarettes, you should start paying the same amount to creditors?<\/p>\n

Would the judge want to be informed if you go out of town on vacation or save up money during the case?<\/p>\n

Would the judge tell you how to spend money?<\/p>\n

Would the judge monitor your every little \u2013 or big \u2013 expense while the bankruptcy case is open?<\/p>\n

The answers to these questions are: no, no, no, no, and no. The court looks at your overall financial situation<\/a>, and you should not be penalized if your spending in some categories is higher or if you have a particular hobby, vice or need \u2013 especially if spending in other categories of living expenses is low.<\/p>\n

A different situation \u2013 and actually, it happens rarely \u2013 is when the family\u2019s income is high, and yet there is no disposable income due to extravagant expenses across the board and the family can\u2019t fathom cutting down any over-the-top expenses. The court would suggest, based on results of analysis known as the Means Test, that in order for this family to enjoy benefits of the bankruptcy case, the creditors should still get some fair payments based on standard expense allowances. \u00a0\u00a0Keep in mind that the court would not actually force this family to make specific payments – the case can be closed without clearing the debts, if the family feels it\u2019s not working out due the court\u2019s guidelines or for any other reason.<\/p>\n

Most people find that bankruptcy is not as onerous as they imagined, and creditor payments \u2013 if any \u2013 are reasonable and manageable.\u00a0 This is what bankruptcy is designed to be \u2013 a benefit, a fresh start, a way for you to clear debts and reorganize financially, and not some awful burden or demeaning endeavor.<\/p>\n

Bankruptcy formulas and procedures are complex but nothing to worry about if you have the right support.\u00a0 For this reason, if you are considering filing bankruptcy, I recommend finding a local bankruptcy attorney<\/a> that you are comfortable with,\u00a0 who will analyze and present your situation to the court correctly, and who will truly help make bankruptcy a positive experience and a fresh financial start for you.<\/p>\n","protected":false},"excerpt":{"rendered":"

People often wonder if the bankruptcy court will tell them how to spend money, or prohibit or limit any expenses. The short answer is, no. It is true that the bankruptcy court looks into whether the person has the financial means to make any payments to creditors, and requires information … <\/p>\n

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