Do you have some special possession you want to keep in bankruptcy? Because you probably can.

corvetteIs there some special heirloom you have or a piece of furniture you like or do you have an old car that you just can’t lose?  Maybe you own an old jewelryclassic ’57 Chevy or Corvette that you want to fix up someday.  You may have a great number of debts which you realize you can’t afford to pay but you are worried about the safety of your favorite possessions if you do file for bankruptcy.

The good news is that you probably can keep these possessions as long as the property’s value is less than the exemptions allowed in bankruptcy.  In bankruptcy law there are very liberal exemptions and these exemptions are what allow you to keep property after the bankruptcy is over.

One very helpful exemption is something called the “wildcard” exemption that you can use to protect any kind of property that you own.  At the time of this writing the wildcard exemption is $26,425.00 and that is pretty generous.

There are other exemptions besides the wildcard.  There is one for your car, and one for your furniture, clothes, and household items.  There are separate exemptions for cars, jewelry, and tools of the trade and don’t worry about you retirement account because that is almost certainly exempt.  Your attorney can advise you about all of the applicable exemptions in your state.

Your property will fit within the wildcard exemption as long as your property is worth less than $26,425.00.  If it does then you can keep it.  To value the property you want to go to a website like Kelly Blue Book for cars or you can go to Ebay or even Craig’s list to see what items similar to yours are selling for.

To get a more accurate valuation of the property you can hire an estimator or property appraiser who, if you pay him, will give you his or her valuation of the property.  If the property is of a special nature like a record collection then a property estimator who owns a record store could do the valuation.  The same thing applies for jewelry or a stamp collection, or an old gun from the civil war (jewelry even has its own separate exemption).  There is usually someone out there who can accurately value your property whatever the type.

valueRemember the bankruptcy trustee can only take your property if it has a value beyond your exemptions.  This is why it is so important to establish the fair market value of the item(s).  So if you (and your bankruptcy attorney) show the trustee that the fair market value is less than the exemption amount that you claim then you will usually be okay.

It is possible that the trustee can get his own valuation which could be higher than yours but if you get a reliable appraiser for the property you can usually defend your appraisal.  It is always good to consult with a bankruptcy attorney if you have any questions about whether you can keep your property in bankruptcy and if you should or should not file bankruptcy.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Corvette by Zombieite.  Jewelry photo courtesy of Gnilenkov Aleksey.

Do I have to go to court if I file bankruptcy?

courthouse 4The answer generally is no you don’t have to go to court for most bankruptcies, especially the chapter 7.  In a chapter 7 bankruptcy you go to a 341 hearing with a bankruptcy trustee presiding but you don’t have to go to court usually.

These hearings are much more informal than a court proceeding and they usually last for only a few minutes.  The trustee will ask you about your assets, your income, and any other questions he or she has about your bankruptcy schedules.

If the trustee sees anything wrong he will call for a continuance of the 341 hearing and ask for clarification or more documentation.  If there is nothing wrong then he will conclude the hearing and you will be done.  With a chapter 7 you will then wait for your discharge and closing of your case.

If the trustee finds something wrong with the case then you could end up in court.  The trustee could file some challenge to your case as could a creditor that does not want his debt discharged.  These challenges are somewhat rare though especially if a competent bankruptcy attorney files your case and thoroughly investigates all aspects of you financial situation beforehand.

These challenges to your case would be addressed by the trustee or the creditor filing an adversary proceeding.  If an adversary proceeding is filed in your case then you probably will appear in court.  These are somewhat rare though and most bankruptcies sail through the 341 hearing and never go near a courtroom.

Another example of a situation that could land you before a bankruptcy judge is the reaffirmation hearing.  A reaffirmation hearing is when you reaffirm a debt for which your personal liability has been discharged in the bankruptcy.

This most often happens in a case where you financed your car.  A car company wants you to in effect sign back up for the debt or they may elect to repossess the car after the bankruptcy stay lifts.  This is especially true if your income is less than your expenses on schedules I and J which is common for chapter 7 debtors who file bankruptcy.

If the trustee wants to object to your discharge then the same could happen and if he wants to take property then he could file an adversary proceeding that could land you in court ut this is very rare.

These things are not all that common though and a good bankruptcy attorney should be able to guide you through the process and advise you on the possibilities of going to court.  Usually though you should only see the 341 hearing room and the bankruptcy trustee for you chapter 7 bankruptcy.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Courthouse photo courtesy of w.marsh.

When do I need a chapter 13 bankruptcy instead of a chapter 7?

Chapter 13 bankruptcies and chapter 7s are very different bankruptcies bur both have advantages and disadvantages.  A chapter 7 is good because it is clean and fast.  It discharges debts quickly.  It is all over in 90 days and you can then go on with your life if you qualify for the chapter 7.  Not everyone does qualify though.

Some people are “means tested” out of a chapter 7 because they make too much money to file one.  They have disposable income and thus bankruptcy law says that they must therefore file a chapter 13 bankruptcy if they want to file one at all.  (They would also qualify for a chapter 11 but that is another story).

Others don’t qualify if there is too much equity in their home.  In a chapter 13 they could then keep the home and continue to make payments on it in the 13.  One must always be careful that you do not violate the “best interests of creditors test”.  This is where the creditors have the right to demand that they get as much in a chapter 13 as they would in a chapter 7 liquidation.

The 13 differs from the 7 in that it is a payback plan where the debtor makes payments to the trustee for from 3 to 5 years.  In this period the debtor pays back some or all of his debts.  Most plans pay only a percentage of the debts but some do pay back 100%.  After the payback period is over then the unpaid debts (if there are any) will be discharged.

But why pay back the debts if you can discharge and escape them?  There are many reasons and one is the income limits of a 7 discussed above.  If you exceed these income limits then you cannot file a 7.  Debtors also file chapter 13s to take advantage of the lien strip and the cramdown.  See here for a blog on what is a cramdown?

The cramdown allows you to write down loans to the value of the property and is useful if you have property that is underwater.  The lien strip allows you to strip off or eliminate a second mortgage on a home if it is completely unsecured.  So if you have a home that is worth less than the first mortgage then the entire second mortgage can be eliminated after the 5 year payment plan is over.

Both of these cannot be done in a chapter 7 and if you want a cramdown or a lien strip then the chapter 13 is your chapter.  If your income is too high then a chapter 13 also makes sense.  There is one more advantage though to a chapter 13.  It can be dismissed by the debtor at any time.  Once you file one you are not locked in like you are with a chapter 7.

The disadvantage though is that you are locked into paying a trustee for a period of five years if you want to complete the plan and get a discharge.  Most chapter 13 fail because people can’t make these regular payments for five years to a trustee.  According to one article I read as many as 92% of them fail and are dismissed or converted to a chapter 7.  This is a very high fail rate and this is the reason why most people file chapter 7s.

You can pay a chapter 13 bankrupty off early though if you have the money.  So if you payments are $300 per month and you are three years in you could pay off the remaining two years early and get out of the 13.  Most people though don’t have the money to do this.

You should consult a bankruptcy attorney to see which chapter is right for you.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis! 

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

What is a fraudulent transfer? Did I do something wrong?

I know that fraud sounds bad and fraudulent transfer sounds even worse.  But his term is often used in and out of bankruptcy.  (Sometimes it is referred to as a fraudulent conveyance).  In your bankruptcy you may have gotten a notice that you are being accused of a fraudulent transfer by the bankruptcy trustee.  Fraudulent transfer rules come from section 548 of the bankruptcy code.  But don’t worry, this can be addressed in the bankruptcy and it does not mean that you are guilty of any crime or even that you are a bad person.

This is because they are not (usually) talking about you committing an actual, intentional fraud where you decided to de-fraud someone of their money or property.  They are instead talking about a “constructive fraud” which is one where there is a law against doing these trnasfers but intent to do fraud is not there.  Fraudulent intent is inferred from your actions.

The fraudulent transfer label is used most often when an asset/property has been transferred to someone else under circumstances that look suspicious. This could be real estate or personal property like a car or a piece of jewelry. In the bankruptcy context it occurs when you transfer an asset to someone else, you receive little or nothing in return, and you are insolvent at the time.

You may have had no bad intent at the time you transferred the asset so don’t worry.  You may not even have thought that it was wrong.  I have had clients transfer all kinds of things for many different reasons.  You will need to disclose the transfer to your bankruptcy attorney and describe the circumstances surrounding the transfer any time you have transferred property before a bankruptcy.

And the look back period varies in different states but in California it is four years.  So any property transferred to someone else in the last 4 years for less than its full value needs to be reported in the bankruptcy.  Especially if that transfer leaves you insolvent which means that your liabilities are greater than your assets.  This would not include a property sale to an outside buyer, especially to a buyer who pays full value.  There is a much shorter “look back” period for these transfers and they are usually not questioned by the trustee.

The purpose of the fraudulent transfer rules in bankruptcy is to prevent people from moving assets out of their estate and then going bankrupt on the debts.  Everyone would give their property to family members if they could and then get rid of their debts.  After the case was concluded then they could take the assets back.  This would not be fair to creditors and is not allowed so report these transfers to your attorney in a bankruptcy.

If you received a notification of a fraudulent transfer in a bankruptcy then the trustee could file or possibly has already filed what is called an adversary proceeding.  An adversary proceeding is a complaint filed within a bankruptcy case that is objecting to some aspect of the case.  A trustee will file one if there is a suspected fraudulent transfer of an asset.  He will want to bring this asset back into the estate to sell it for the benefit of the creditors.  (See here for more on adversary proceedings).

The problem here is that the trustee will seek to recover the asset from the person who received it.  If the transferred asset has gone to your relative or friend then they would be drawn into the case so that the trustee could take the asset from that person.  This person, the recipient of the asset, is not going to be too thrilled about this so this is a fairly serious problem.

As with all adversary proceedings this complaint must be answered.  Even if no adversary has been filed you still need to contact an attorney to deal with this issue.  Sometimes a settlement can be worked out but often the proper procedures must be followed timely or a judgment can occur for the entire asset.  If this is a piece of real estate or and expensive piece of jewelry then this can mean a great loss of money if a settlement could have been worked out.

I am bankruptcy attorney in San Diego who handles adversary proceedings for both settlement and trial.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

What the heck is an bankruptcy adversary proceeding? Why would someone bring one against me?

Adversary proceedings happen sometimes in bankruptcy cases.  I write about this because a debtor will sometimes file for bankruptcy and then get a notice of an adversary proceeding that has been filed in the case.  This can cause tremendous worry to the client.  But don’t despair, a good attorney will be prepared to handle one of these cases and protect your rights.

An adversary proceeding is literally a lawsuit within a bankruptcy case.  A case within a case.  It means that someone objecting to or fighting about something in the bankruptcy case.  Somebody is letting you know that they have a problem with some aspect of your bankruptcy and they are going intervene in your case to get their problem/objection dealt with.

An adversary proceeding can be brought by just about anyone.   A debtor, a creditor, or even the bankruptcy trustee who is tasked with looking for things like fraud in a bankruptcy case. Almost anyone can file one if they have a legal claim against the debtor or his property.

An adversary proceeding most often happens when someone is intervening in the bankruptcy case to say that some debt is not dischargeable.  Allegations of fraud are the most common reason to file one of these.  Creditors or the trustee himself can file an adversary to challenge the dischargeability of some debt if fraud is suspected.  These are the cases filed under the “exceptions to discharge” under 11 USC § 523(a)(2) of the bankruptcy code.  In addition to fraud, but less often, misrepresentation, false pretenses or other allegations can be pleaded in these cases.

The fraud cases usually come down when a credit card company files an adversary challenging a large charge made on one of your credit cards prior to filing.  These same companies can also object to a large cash advance taken out on a card especially if the cash advance is taken out at a gambling casino.  (I have had a number of these cases over the years as this is more common than one might suspect).

There can be other larger allegations of fraud that can allege fraud over some asset like real estate.  These cases can reach into the millions.  If you find that an adversary was filed against you for very large debt then it is even more important to contact an attorney right away to protect your rights.  With all of these cases is the other side wins then the debt they are challenging will be deemed not discharged in bankruptcy and you will still owe it when the bankruptcy case is finished.  This tends to defeat the whole point of bankruptcy and therefore these cases must be dealt with quickly and correctly.

If it is the trustee who is trying to recover property for the bankruptcy estate (property that was transferred out of the estate prior to filing) then he would file an adversary action alleging fraudulent transfer.  In that case he would go after the recipient of the property which could be a problem if it is a relative or friend of the debtor.  (See here for more on fraudulent transfer).

Other reasons for adversary proceedings would be when a creditor believes a bankruptcy was filed in bad faith.  A debtor can also file an adversary proceeding against a creditor for violations of the bankruptcy automatic stay when a creditor attempts to collect a debt which he cannot because of the bankruptcy.  There are adversary proceedings filed by the debtor’s attorney to strip off second mortgages.

There are numerous reasons for adversary but contact a bankruptcy attorney right away if you get one filed against you.  There are distinct timelines to respond to one of these and definite procedures for doing so.

I am bankruptcy attorney in San Diego who handles adversary proceedings for both settlement and trial.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Bankruptcy Good News! Because of bankruptcy exemptions you can usually keep all of your possessions after filing for bankruptcy!

Most people are afraid to file bankruptcy because they wrongly believe that they will have to surrender some or all of their possessions once they go bankrupt.  This is not true and has not been true for hundreds of years.  You will usually not have to surrender any possessions after filing bankruptcy in the vast majority of cases.  This is all because of the magic of bankruptcy exemptions and these exemptions have an interesting history.

When you file for bankruptcy a bankruptcy estate is automatically created which includes all of a debtor’s possessions.  These possessions could be sold by a bankruptcy trustee if it were not for the magical exemptions.  Exemptions allow debtors to take their property outside of the bankruptcy estate and keep it for themselves.  A Trustee cannot touch any properly exempted property.  This is what makes bankruptcy so attractive to you when your debt load gets excessively high.

Long ago it was true in England that a debtor had to give up all of his possessions to file for bankruptcy.  This included literally the shirt on his back.  In those days bankruptcy laws required a debtor to turn over all of his clothes to his creditors.  This resulted in public breaches of the peace.  A judge in old England responded with the very first bankruptcy exemption.

This was an exemption for the debtor’s one suit of clothes.  It allowed the debtor to keep his clothes so he would not be forced to break the public nudity laws.  Judges could simply not allow a situation where a person exercised their legal right to file for bankruptcy but in doing so were forced to break another law which was the law against public nudity.

That old decision started the ball rolling and bankruptcy exemptions have been expanding ever since.  Cooking implements were added and then furniture.  Homes were later included in exemptions so people could have a place to live and not forced to be homeless by bankruptcy.  Vehicles were added so debtors could get to work as were tools of the trade,  jewelry, as well as a few others.  In addition to these exemptions at some point in America we added a blanket “wild card” exemption into which a debtor can fit property of any kind.

Currently this wild card exemption is over $23,000.  In it you can protect cash, stocks, bonds, jewelry, collectibles, or any kind of property you see fit.  This is a very generous exemption and it is why most people can keep most of their property in a bankruptcy.  Most of my clients historically do not have assets in excess of this amount and therefore they can file bankruptcy and get rid of most of their debts and they can usually keep all of their assets.

So that is good news for you if you are considering filing for bankruptcy.  Don’t worry about your property.  Just contact a bankruptcy lawyer before you file to get your property properly exempted and you can move on debt free after your bankruptcy discharges.

I am a San Diego bankruptcy attorney.  Please visit my website for more information at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Local San Diego restaurant goes bankrupt! Say Goodbye To Pat and Oscar’s.

Apparently another victim of the economic crisis that seems to still be gripping America, Pat and Oscars filed for Chapter 7 bankruptcy in September with the last three corporate stores closing on 9/27/11.  A chapter 7 means that they will be liquidating the company and not reorganizing it as they would in a chapter 11.  This could mean the end of Pat and Oscars but possibly it will survive in some form as it was alluded to in an article the “Restaurant News”.

According to that article there are numerous franchised stores out there that are not operated by the corporation but are in fact operated by individuals.  Many of these people undoubtably want to continue with the operation of their restaurants as they have families to feed and bills to pay.  But the question becomes how do they do this when the corporation goes bankrupt?

The company did everything it could in the past to keep the brand alive including cutting costs and creating a new proto-type store.  None of this worked though to save the company as sagging sales and a bad economy has claimed another restaurant victim.  People do tend to eat at home more in a down economy as they have far less disposable income.  I usually tell my clients to eat at home more to cut their expenses after filing a personal bankruptcy.

So nobody blames Pat an Oscars for filing but the individual franchise owners could be left in the lurch.  But according to the article there is possibly a way out for them.  The company itself has been around since 1991 when it was founded by Pay and Oscar Sarkisian.  Sizzler bought it in 2000 for $16 million and Sizzler became Worldwide Restaurant Concepts which was then acquired by Pacific Equity Partners in 2005.  In the bankruptcy the parent company was listed as “FFPE LLC”.

They got a new chief executive in 2008 and they tried to grow the restaurant and that didn’t work.  When they filed bankruptcy there were 14 locations of which 9 were owned by franchisees.  These franchisees could get liquidated too if they are not careful but there is an alternative.  In the article they say they will have to “go to court”.  That is true if they want to save the brand and operate it themselves.

The problem is that they are now part of a bankrupt corporation.  That bankrupt corporation will have debts.  It is the job of the Trustee in any chapter 7 bankruptcy to liquidate any assets the corporation may have to pay creditors.  It is possible though that in the franchise agreement for Pat and Oscars the franchisees are owners of all of the property in their restaurants and they just have some contractual agreement to purchase supplies from the mother corp.  Then their individual store assets would fall outside of the bankrupt estate.

That still leaves the name of Pat and Oscar’s.  That is surely owned by the corp. and the trustee would probably be duty bound to sell the name as that is an asset of the estate.  But according to an article in “Sign on San Diego” the parent company is listing assets of $331,459 and liabilities of $4.1 million so we know that there are considerable debts owed to creditors who will want to get paid from any asset that the Trustee can discover.

But also the article quotes a “consultant” who says that the franchisees will have to first form an association and then petition the court to use the name.  This is possible I believe as they will have to form a new business as the old one is defunct.  It is also possible that the trustee will allow the use of the name if he determines that it has no value to the estate.  It is unlikely that anyone would buy it so the franchisees would at most have to pay a nominal fee for its use and they could possibly use it for free is the trustee abandons the name.

Then they would take this new business and operate their restaurants and they could even change the name to something similar if they can’t get the name or if they don’t want to pay for the name.  This is not unprecedented according to the “Restaurant News” article as “Ground Round” franchisees in Boston operated their 24 restaurants after their parent company went bankrupt.  80 units of “Bennigans Steak and Ale” were similarly operated under a new franchisee owned business after their parent company went bankrupt.

Therefore it is possible that we will see more of Pat and Oscars as it is certainly okay from a bankruptcy perspective to operate a new franchisee owned restaurant chain after a parent company bankrupts.  The question though is if the restaurants can operate profitably in this down economy.  We shall see.

So you still may be able to take the family to Pat and Oscars in the future.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.  Please visit my websites for further information at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

If you or someone you know needs to file a bankruptcy please get my FREE E-BOOK: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at farquharesq@yahoo.com.

I receive payments from a trust. Can I keep those after a bankruptcy?

Beware of this issue as this might prevent you from filing.  If you have a trust and you receive regular disbursements from this trust then those disbursements are generally not treated as exempt beyond the allowable exemption amount.  It would make sense that they would be treated like income but they are not.  You have no problem receiving income in a bankruptcy as long as it does not exceed the means test limits.  Trust payments are treated differently though and the bankruptcy trustee can and will take them.

You can keep them as long as they don’t exceed wildcard exemption.   In California the “wildcard” exemption is around $23,000 so you would keep every trust payment up until that limit was reached.  Once the limit was reached the trustee could ask that all trust disbursements be paid to the bankruptcy estate until the debts are all paid.  You would then lose them.

This is an unacceptable situation for most people and one that will cause you extreme distress.  If you receive trust payments then you want to consider carefully whether to file bankruptcy or not.

There is one situation which can save you.  If your trust has a “spendthrift clause” then it may save your disbursements.  These clauses that are put in trusts when they are created prevent trusts from being attached or taken by any creditor.  These clauses also work to prevent the bankruptcy trustee from taking your trust fund payments.  If you have a spendthrift clause in your trust check with your trust attorney and give a copy of your trust to the bankruptcy attorney so he can see it himself and decide whether there your spendthrift clause looks good.

It is very important not to file without this careful consideration of these trusts.  I have seen cases where the trust payments were seized and a settlement of all of the debts had to be paid to the trustee before payments could resume.  Of course you should probably not file for bankruptcy if your trust payments can be seized to pay your debts.  A debt settlement option should then be considered.

I am a bankruptcy lawyer practicing bankruptcy law in San Diego, CA.  For more info. visit my website at www.farquharlaw.com.

Will I pass the means test in bankruptcy but I have a spouse who makes good money but is not filing?

Good news!  That is okay!  Generally a non-filing spouse’s income is included in the bankruptcy means test as household income even if the spouse is not filing bankruptcy unless the spouses live apart.  But if your marriage is a recent marriage of less than six months then not all of the non-filing spouse’s income will be included in the household income calculation anyway.

If it is a marriage longer than six months then there is something called the marital adjustment which will allow you to reduce the amount of your spouse’s income that will appear on the means test.  The marital adjustment appears on line 17 of the means test form 22A.  There are several lines there but you can add an attachment as I did recently in a case.   This marital deduction allows you to deduct from your spouse’s income all of your spouse’s expenses that your spouse pays separately.

The first one is the deductions that come out of the non-filing spouse’s paycheck.  The non-filing spouse will have taxes, insurance, union dues and even a retirement deductions taken out of his or her paycheck.  The income for the spouse goes into the means test in the gross amount but the deductions are taken out here.  The retirement can be included here where it would not be for the filing spouse unless the filing spouse had a mandatory retirement.

Remember that this spouse is not filing bankruptcy and can spend money and take deductions as needed.  The non-filing spouse is not attempting to discharge their debts so the trustee has much less control over what they take on deductions than he or she would over a party that is filing for bankruptcy. But still the Trustee can challenge these marital deductions so it is good to have a bankruptcy attorney to analyze which ones can be justified.

The non-filing spouse can also take his or her credit card payments as marital deductions.  These payments will have to be made after the bankruptcy as they are not being discharged and thus they can be taken here.  If the non-filing spouse has a car of their own then they can take those car expenses there too if they have not already been taken in the car section of the means test.  The same would go for a separate cell phone.

There are other expenses too like separate student loan payments that the non-filing spouse can take.  Also if they have traveling or food expenses for themselves or if they pay child support for a child from a previous marriage then they can take those expenses.  Anything that is truly an expense just for them and was not paid on a regular basis for the household expenses for the debtor or the debtor’s dependants.

This gives you a lot of leeway for expenses to be included here that you or your attorney can come up with that meet this criteria.  Most people do have these expenses that are separate and distinct from the expenses that are contributed to the household.  This is because most people, even if married, these days have separate and distinct lives.  They may have many debts and obligations and expenses left over from before the marriage or just expenses that are truly just for them.

So don’t despair if you don’t pass the means test with your spouse’s income.  The marital deduction sections may make bankruptcy possible.  If it seems too complicated then contact a bankruptcy attorney who will help you decide which expenses can be taken on the marital deduction section of the bankruptcy means test.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.