How Does An Illinois Bankruptcy Attorney Decipher The Debtor’s Budge...

When we ask the client for information concerning their income and their expenses it’s for a specific purpose.  The bankruptcy petition and schedules require us to list in Schedules I and Schedules J the amount of money that the individual is making per month and spending per month.  What someone is making per month is relatively easy if you can obtain your paycheck stubs.  Whether you’re paid weekly or biweekly or monthly, we can help you determine exactly what you’re making per month and what the proper deductions are per month out of your paycheck. 

In terms of expenses per month, we are going to help you by giving you an interview and asking you, “What do you think you spend on food?  What do you think you spend on clothing?  What do you think you spend on transportation,” et cetera.  If you do not know exactly what those figures are, don’t be alarmed.  The court just wants to get a rough estimate of what you’re spending in many categories per month for expenses.  If you don’t know exactly what it is, we can kind of give you a hand in helping you and here is how we do it. 

After interviewing thousands of people per year for nearly 20 years I have a pretty good idea on what people spend for food each month, what people spend for clothing each month, what people spend on medical expenses per month, and what they spend on gas, meaning transportation.  Once I throw out a figure and ask them, “Does that sound about right,” more often than not the client says, “Yeah, that’s about right.”  So don’t worry if you don’t know exactly what you’re spending.  You don’t need to keep a monthly budget before you come to see us.  We will help you determine, with your help, what you’re spending per month and of course what you’re making per month. 

Again, we’re not doing this to be nosy.  We’re doing this because the bankruptcy code requires us to do it.  Here’s where it’s important.  If your income exceeds your monthly expenses, then maybe you qualify for Chapter 13, which is a debt repayment plan under the bankruptcy code.  If your income and expenses are either breaking even or if you’re operating at a slight loss or even at a big loss per month, then Chapter 13 is not possible because you don’t have available money per month.  Then you more likely fit in a Chapter 7 fresh start. 

Over 75 percent of the cases filed throughout the country for bankruptcy are of the fresh start Chapter 7 variety, so three out of every four people who come into my office are going to qualify for Chapter 7 fresh start bankruptcy.  Income minus expenses is one way that we solidify that choice of Chapter 7 over Chapter 13.  In addition, it has to be listed on the bankruptcy petition, and it has to be signed under all penalties of perjury that the information is true and accurate.  So income and expenses is an important factor when preparing a bankruptcy petition and you should have a general idea of what you’re spending per month and what you’re earning per month when you come in to visit the law office.  But don’t worry.  If you don’t have all that information we will help you acquire it.

Illinois Bankruptcy Attorney David M. Siegel