How to file bankruptcy #9 of a series – Allowances

19 Mar How to file bankruptcy #9 of a series – Allowances

So we’re still looking at that creation of Congress – lovingly known as form B22A.

Once we calculate your “current monthly income” and we compare it to the “applicable median income”, we know whether your chapter 7 case is presumed abusive.

You can overcome the presumption of abuse if you have enough expenses to leave you with insufficient disposable income to fund a chapter 13 plan.

Today, we discuss “allowances.” Here are some allowances you can use to reduce from your income:

  • an allowance depending on how many family members you have
  • additional allowances if you have a family member over 65 years of age
  • housing and utilities – non-mortgage expense – per local standards in IRS manual
  • average monthly mortgage payment (no double dipping here against the allowance above)
  • vehicle operation expense
  • public transportation expense (if you actually use it)
  • vehicle ownership costs (local standards) (some courts think this applies only if you have a car with a lien on it and then make you reduce your monthly car payment – other courts disagree) (think you can figure this out without a lawyer??)

These are fixed expenses for the most part – your mortgage payment is the only item here which might be variable. Think you’re done? Hardly. Once we figure out allowances, we next have to consider deductions.


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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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