What is a REASONABLE living expense?

One thing that bankruptcy debtors can count on is an objection from the trustee if he or she believes that a monthly living expense is unreasonable. Which leads me to the title of this blog. WHAT IS REASONABLE? This is certainly a relative term. What is reasonable to me may be outlandish to you or vice versa. And, more importantly, what is reasonable to you may not be reasonable to your bankruptcy trustee.

I often find myself discussing what I believe will be deemed reasonable with clients at Halcomb Singler, LLP. For example, many clients wonder if cable television is a "reasonable" living expense. The short answer, in my experience in the Southern District of Indiana Bankruptcy Court, is yes. I wish all of my reasonable living expense inquiries were this simple.

Believe it or not, bankruptcy debtors can also easily budget $100.00 per month for entertainment and $50.00 to $100.00 on haircuts (depending on family size). I have also filed bankruptcy petitions with expenses for pet food/vet care which have not been met with any objection.

Your medical expenses are reasonable. If your doctor prescribes it, it's reasonable. Save your receipts from the pharmacy showing your copay. Save receipts from when you visit your doctor. If you are in need of a medical or dental procedure, consider asking your doctor for an estimate of the upcoming cost so that it may be reflected in your budget.

One of the most subjective living expenses is food. A client with a family of 4 is often shocked to hear that I do not believe a trustee would find $1,000.00 per month reasonable for food. This is normally because that family is spending a few hundred dollars eating out each month. In my opinion eating out is better suited for the entertainment category....not food. This includes eating out at lunch during work hours. Take a brown bag lunch and just watch the savings pile up. In my experience, a more reasonable amount for groceries is about $600.00 to $700.00 for a family of four. However, if you or a family member has specific nutritional restrictions due to a disease or other reason talk to your attorney about it. Not every debtor is the same and your circumstances may make a higher living experience in one category or another reasonable while for another family the same amount would be unreasonable.

So, how are debtors to prove that their living expenses are reasonable? I often tell my clients to begin saving their receipts once they have made the decision to file bankruptcy. Chances are that they will not need the receipts. However, in the event that a trustee objects to an expense it can be very helpful to have them on hand. Telling the trustee that you spend $900.00 on groceries each month for your family of 4 is less effective than showing the trustee 3 months of receipts for groceries averaging $900.00 per month. The receipts will allow the trustee to see exactly what you are buying (food, as opposed to alcohol, dvds, or other non-food items often found at grocery stores) and help the trustee come to the conclusion that your particular expense is reasonable.

Getting your budget in order prior to the filing of your bankruptcy petition is not only helpful for your bankruptcy, but can be a great way for you and your family to move forward after bankruptcy. If you come up with a reasonable budget for your bankruptcy you can use that budget to make sure that you stay on track financially post-bankruptcy.

If you live in Noblesville, Carmel, Fishers, Kokomo, Anderson, Indianapolis or Tipton and want to know if bankruptcy might be right for you contact my office for a free consultation at 317-575-8222 or contact me for a free initial consultation.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.