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Allowable Living Expenses

The following expenses are typically considered as “allowable living expenses” in a Chapter 7 or 13 bankruptcy proceeding if reasonable in amount:

  • Rent or home mortgage payment (including lot rented for mobile home)
  • Electricity, natural gas, butane
  • Cable television
  • Internet service
  • Water and sewer
  • Telephone (including cellular phones)
  • Trash service
  • Home maintenance/repairs
  • Food
  • Clothing
  • Laundy and dry cleaning
  • Medical and dental expenses (out of pocket)
  • Transportation (including gasoline, vehicle maintenance and/or public transportation)
  • Recreation/entertainment (must be reasonable in amount)
  • Charitable contributions (not exceeding 15% of gross monthly income)
  • Homeowners or renters insurance
  • Term life insurance for yourself (but not insurance on any of your dependents)
  • Health insurance (including HMO, etc.)
  • Automobile insurance
  • Property taxes
  • Automobile payments (including lease payments)
  • Alimony or child support payments
  • Child care (such as baby-sitting, day care, nursery and preschool)
  • Pet care
  • Regular expenses from operation of a business or profession
  • Student loan payments
  • Educational expenses that are required as a condition of employment
  • Tax payments to I.R.S. or state taxing authorities if not dishargeable in bankruptcy
  • Involuntary retirement contributions that are required by your employer
  • Voluntary retirement contributions*
  • Payroll taxes (including income taxes, social security, medicare, etc.)
  • Self-employment taxes
  • Union dues
  • Mandatory expenses required for employment (such as uniforms, parking, etc.)
  • Payments for necessary household items (such as furniture, appliances and/or computer)
  • School expenses for minor children under 18 years (up to $137.50 per month per child)
  • Sport or school activities for minor children

* Voluntary retirement contributions and loan repayments to qualified retirement plans are typically allowed in Chapter 13 cases if reasonable in amount. In Chapter 7 cases, these expenses may be considered allowable only if reasonable in amount and necessary for the debtor’s support. If the debtor is many years away from retirement, the bankruptcy trustee may feel that these continued contributions and loan repayments are not currently necessary and exclude them as allowable expenses when calculating whether or not the debtor has sufficient disposable income available to repay his debts. To prevent a debtor’s Chapter 7 case from being dismissed or having to be converted to Chapter 13, the debtor should list plenty of additional allowable expenses to demonstrate that he has little or no funds available after paying all of his allowable living expenses. The allowable expenses that he lists, however, should be truthful and reasonable.