Determining Your Personal and Household Expenses in Arizona Bankruptcy
When you decide to work with us to determine if Arizona bankruptcy is the right choice for you, we will want to review all of your property (assets) and your debts. To read more about the kinds of information we will want, read our article on “Gathering All the Facts.” We will also want to try and determine what your monthly expenses are for you and your family.
One of the challenges when facing bankruptcy is accurately determining your personal and household expenses. Just as it is important to disclose to us all of the debts and property you own, it is critical that we gather an accurate picture of the financial needs you have on a monthly basis.
Often the stress of a lost job, or huge medical bills will mean that our clients have been living on a limited budget under that which is necessary and reasonable. Let’s say that you own a home and your income has fallen significantly. Most homeowners in financial distress will choose not to spend money on maintenance. If you have deferred plumbing, electrical repairs, even painting, these are important expenses to take into consideration when determining your expenses.
It may also be that you haven’t necessarily tracked your monthly expenses related to food, clothing, and other necessities. Sometimes when you are struggling, it can be difficult to look at the realistic picture of what you need to spend to meet the needs of you and your family.
If you lost health or dental insurance or just haven’t been able to afford the cost of it, you may have made the choice to not go to the dentist or doctor as needed. When you consider your monthly expenses, it is important to include the costs of needed health care appointments. Even if you couldn’t afford to purchase health insurance before your bankruptcy you can consider purchasing health insurance prior to bankruptcy filing and include this expense.
As you estimate your expenses, we have found that clients often underestimate or overlook some of these kinds of expenses. Here’s a list of things you should think about.
Health insurance and other medical expenses: If you have health insurance or need to purchase it, include this amount, but don’t forget that you should also include any co-pays, vitamins, glasses or contact lenses, eye care, deductible on your health insurance policy, check-ups, dental care including any dental work you may have decided to postpone.
Home maintenance: In your monthly budget, you should include both expected maintenance and unexpected expenses. This could include replacing old appliances, heating, and cooling systems. Perhaps you need roof repairs that you’ve put off or need to paint. If you are unable to physically do yard work or repairs, remember to include to costs of hiring someone to perform this maintenance.
Expenses for Children: When clients have not been able to pay for childcare, they may have been using friends, family, and neighbors. Prior to filing, you should consider the well-being of your child and determine if this arrangement should continue or whether or not paid childcare is a better option. Beyond childcare expenses, however, you should also consider school lunches, activity expenses, school uniforms, and extra-curricular activities such as sports or music-lessons, if those expenses are reasonable. If your children are still babies, the cost of diapers and other baby expenses can be much higher than an older child. Remember to also figure in additional costs for when children are not in school, such as summer and winter breaks.
Personal Care: Especially in a large family, it is important to figure in the cost of haircuts and other personal care in your monthly expenses.
Car Repairs, Maintenance, and Insurance: Even if your car doesn’t need repairs immediately, remember to include regular maintenance costs. If your car is older, you should consider that maintenance might cost over $1,000 per year. Include the costs for registering and emissions testing your car as well. Often clients will forget expenses that are only charged once a year.
Alarm and Pest Service: Depending on where you live, it may be necessary to include alarm service or pest control service in your monthly budgeted expenses.
Gifts: You can consider including reasonable amounts for holiday and birthday gifts.
Work Tools: If you must purchase uniforms or tools for your work, include these expenses in your monthly budget.
Fees: Clients often forget to include bank charges for ATMs or checking accounts.
Pets Costs: If you claim a pet as an asset, you can include reasonable expenses for vet visits and food.
Life Insurance: If you have children and do not have a life insurance policy, you might consider including the cost of term life insurance in your monthly expenses.
Other Important Information About Your Financial Life
Other things we will want to discuss as part of initiating your bankruptcy have to do with issues such as payroll deduction. Some clients will use payroll deductions to send money directly to savings accounts, to purchase savings bonds, to donate to charitable organizations, or for other purposes. As we proceed with your bankruptcy, it is helpful to stop preauthorized payments to your creditors or electronic funds transfers before filing.
By stopping these payments or transfers now, we can avoid complications related to trying to get back money paid to creditors outside of any bankruptcy payment plans. Stopping these payments will also make more money available to you each month as income.
Sometimes clients will transfer property to others in order to avoid having the property dealt with in the bankruptcy. For example, if you have a car that you don’t want to have sold off during your bankruptcy process, you may give the car to a relative to avoid losing it. However, this kind of transfer would be considered fraud.
As your attorneys, we would encourage you to discuss with us any property you would like to give away or sell before filing your bankruptcy. We also discourage our clients from transferring any money into or out of bank accounts, loaning or giving money to family or friends, or opening a joint account with anyone other than your spouse.
Finally, as we review all of your financial information we will ask you whether or not you remember ever exaggerating or giving untrue information about your financial situation to a creditor. If you have, that statement may provide creditors with a possible objection to discharging your debt to them. Remember it is critical that we work together to get all of the facts in your case.
As bankruptcy attorneys who have served thousands of clients in Arizona, we have decades of experience. We are committed to helping you walk through the bankruptcy process. We know that going through bankruptcy is stressful. Through open communication, a commitment to educating our clients, we strive to make this process as easy as possible. Even if you are not sure if bankruptcy is right for you, we encourage you to make an appointment for a free consultation. Call our office in Phoenix or Tucson today.