The reality is that bankruptcy can affect anyone from any walk of life and the current global economic crisis has seen more people seeking protection from their debts and debtors by filing for bankruptcy than at any other time since the Great Depression of the 1920s.
An even bigger misunderstanding in relation to having to declare bankruptcy is that you wind up becoming financially destitute as a result of taking this course of action. Now filing for bankruptcy isn\’t something that anyone ever wants to consider but it\’s also important to remember that the laws of the United States are there to protect you in the event that you do have to declare bankruptcy. It also means that in many cases you\’ll be allowed to retain your property and create a repayment schedule, over a period of 3 – 5 years, to clear your debts.
What the United States bankruptcy process also caters for is the fact that you have living expenses which need to be paid and this has to be taken into consideration. The good news is that there is quite a lot of \”give\” when it comes to what personal expenses you\’re allowed when you do actually file.
Here are the main examples of what personal expenses can be claimed, and no doubt the ones you\’re most concerned about:
Food and Clothing
When it comes to the various items that you need to actually survive, such as food, clothing and personal care products, the total allowable amount for these items is no more than $1,370 per month for a family of four. This amount is based on the figures provided by the IRS and not on your actual expenses themselves.
Housing & Utilities
The permissible amounts you can claim for paying for your housing and utilities expenses is based on local standards and costs, due to the variances from one state to the next. The final figure is based the size of your family and not your actual projected expenses. In terms of the actual expenses you\’re allowed the figure can vary from a few hundred dollars per month to several thousands dollars per month.
Transportation
The courts recognize that if you\’re not able to travel then you won\’t be able to continue in or gain employment, which in turns means you\’ll be unable to pay your debts. So if you have transport costs like bus or train passes, car and/or insurance payments, gas costs then these are all considered as allowable expenses but based on local standards and what the courts deem to be reasonable. Permissible transport expenses also only extend to usage of cars in the family.
Miscellaneous Expenses
During the bankruptcy process certain other expenses can also be considered as part of your filing. These can include child care, life insurance, cell phone use and any educational expenses which are either related to your job or those of a child with mental or physical challenges.
The key to making the most of your personal expenses claim when filing for bankruptcy is to compile a very comprehensive, yet reasonable budget to present to the court. If you\’re in any doubt about which personal expenses you can claim for then it\’s always advisable to seek professional legal counsel on the matter.