Monthly Living Expenses

• In bankruptcy law, it is understood that a significant portion of a debtor's income will be used to pay monthly living expenses. These cost-of-living expenses include rent or mortgage payments, car payments and utilities. Additional expenses include auto and home insurance, gas and phone service. All of these expenses are listed in Schedule J of the bankruptcy petition. The bankruptcy trustee carefully reviews the cost of the monthly living expenses to make sure they are not excessive.
  
  

Tax Refunds

• Normally, debtors are required to submit any tax refund received from the IRS to the trustee during the length of the bankruptcy case. The tax refund is considered excess money taken from the debtor's income that should be distributed to creditors. Debtors can keep this money under certain circumstances. A bankruptcy attorney can advise a debtor if keeping the tax refund is possible, considering the factors involved in that individual's case. A request to retain the tax refund has to be approved either by the trustee or the bankruptcy court. If the request is granted, the debtor will still have to give that money to the trustee by making higher monthly trustee payments in proportion to the amount of the tax refund.
  
  

Loans

• When a debtor wants to purchase certain items, such as a house or a car, during the Chapter 13 bankruptcy, permission must be granted by the trustee or the bankruptcy court. The item the debtor wants to purchase should be necessary and reasonable. The process for presenting the request may vary depending on the jurisdiction. A motion or stipulation is submitted, along with documentation from the lender verifying the loan terms and any additional documents requested by the trustee or bankruptcy court. If the expense doesn't appear to jeopardize the status of the case, or the monthly payments to creditors, permission to obtain the loan may be granted.
  
  

Personal Injury Settlements

• Debtors are allowed to keep payments received from personal bodily injury settlements. They are also allowed to keep compensation for lost wages. These benefits are claimed as exempt under 11 U.S.C. §522(d)(11). All or a portion of these payments are claimed as exempt depending on the amount of money received and circumstances of the individual case. Discuss any recent or pending settlements with the bankruptcy attorney so that the funds are properly disclosed to the bankruptcy court and are handled properly according to the bankruptcy code.