Continuing with our series on bankruptcy schedules, today we'll look at Schedule J, which is used to provide information about your monthly expenses. Schedule J is usually not discussed without discussing it in conjunction with Schedule I – the income schedule, but we focus on each individually to emphasize the importance of each of these budget schedules. Schedule J helps the bankruptcy trustee determine your disposable income, which is the amount of money you have left over each month after paying your necessary expenses.
As we discussed in conjunction with our analysis of Schedule I, the budget schedules are critical in a chapter 13 case. Working in conjunction with Schedule I (related to the Debtor's income), Schedule J is used to determine how much a debtor is able to pay under a chapter 13 repayment plan. Ultimately, in order to be able to confirm a chapter 13 plan, a debtor must be able to pay at least the amount of their "disposable income," as determined by schedules I and J. As a result, Schedule J takes on additional importance in a chapter 13 case. However, Schedule J is still important in a chapter 7 case, as it shows the total picture of your financial situation. If, for example, your income significantly exceeds your expenses, then a Trustee may question the good faith of filing a chapter 7.
It's important that you and your attorney look closely and scrutinize the expenses itemized in Schedule J – because the amounts must be considered reasonable in order to be considered legitimate reductions of income used to determine "disposable income." Trustee's will generally use IRS guidelines in determining allowable amounts of many deductions.
Note that the debtor's expenses do not come into play in determining the application of the means test that we looked at in our discussion of Schedule I.
Step 1: Gather Information About Your Expenses
Before you can start filling out Schedule J, you'll need to gather information about your monthly expenses. This may include bills, receipts, and other documentation that shows how much you spend on necessary expenses each month. Be sure to include all expenses that will be ongoing, including your mortgage, utilities, insurance, car payments, etc. It is not necessary to list credit card payments or other payments that will be discharged as part of your case.
Step 2: List Your Expenses
Once you have all of the necessary information, you or your attorney can start listing your monthly expenses on Schedule J. For each expense category, you'll need to provide the following information:
- Category: This is a brief description of the expense category (e.g. housing, food, transportation).
- Monthly amount: This is the amount of money you spend on this expense each month.
Step 3: Complete the Form
Once you've listed all of your monthly expenses on Schedule J, you or your attorney will need to complete the rest of the form. This includes providing your name, case number, and other basic information, as well as signing the form to certify that the information you've provided is true and accurate.
Step 4: Review and File
After you've completed Schedule J, review it carefully to make sure everything is accurate and complete. Once you're satisfied with the form, you'll need to file it with the bankruptcy court, along with the rest of your bankruptcy paperwork. Make sure you don't omit expenses – because if you do, it may impact your ability to get a plan confirmed in a chapter 13. For example, if you fail to list any tax liabilities, then a trustee my determine that your plan is not feasible because you haven't accounted for all of your expenses, and therefore you won't be able to satisfy the payments contemplated in the plan.
In conclusion, completing Schedule J is an important part of the bankruptcy process. By following these steps and seeking the guidance of a bankruptcy attorney if needed, you can ensure that your monthly expenses are accurately listed, and that your bankruptcy case proceeds smoothly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.