Bankruptcy Secrets
Actual
Expenses versus IRS Expenses
The new bankruptcy law punishes people in entirely new ways. Under the old bankruptcy law
your actual living expenses were taken into account when calculating your
future financial
obligations. You would prepare a detailed budget and the court would use that to determine
your future debt payments, if any.
The new bankruptcy law doesn't care about your living expenses. That process has been replaced with a terrible system that is much more punishing. Your actual expenses are ignored and replaced with expense numbers provided by the IRS. Unfortunately these IRS figures are much lower that the actual expenses most people pay. If you're forced into a five year long Chapter 13 repayment plan, you can plan on living on somewhere around half what you're used to.
And if you have the great
misfortune of living in a state with a low homestead exemption and a very high cost of
living - you're really out of luck. Chances are you'll be forced into a five year long
Chapter 13 repayment plan with very little money to live on. Say goodbye to your cable TV,
your cell phone, your Internet access, going to movies etc. Who said slavery
was dead?
