Schedule J

[okiemom2008]

Is this what determines chpt. 7 or chpt. 13 and if so, is there a website on what the numbers should be, or a "normal amount" to put on things like clothes, food?

Also, do they go buy gross or net when they calcualte numbers?I am hoping net....

[justbroke]

Is this what determines chpt. 7 or chpt. 13 and if so, is there a website on what the numbers should be, or a "normal amount" to put on things like clothes, food?

Also, do they go buy gross or net when they calcualte numbers?I am hoping net....

No. The Means Test is what determines which chatper you file. The Means Test was added as part of the BAPCPA of 2005 (the new Bankruptcy Code).

Schedules I and J have been around for a while.

All numbers are based on gross. They allow you to deduct certain required items, like federal, state and local income taxes, union dues, etc.

[willowhare]

2 Different sets of numbers

1. The median/means test is what initially determines whether you are a ch. 7 or 13 case.

If your income is below your state's median for your family size, you can try for a Ch. 7 without automatic presumption of abuse. If it is a little over, go through the complete means test, where you compare either what you pay for certain items or the IRS standards for those items (food, clothing, etc.) to your income. If you fail that test as well, you will be kicked into ch. 13.

2. Schedule J is where you lay out what you actually pay for certain items/utilities per month. This is then compared to your take-home income. If you have a significant amount of income left over, you may be forced into a chapter 13 repayment plan.

How trustees define "significant" varies from court to court and by what you owe. You need to have the amount of leftover income as close to 0 as possible.

My advice: first, work a sample means test. Then, do a trial run of Schedule I (income) and Sch. J. If you wind up with a chunk of income left over, take steps to use up that income--increase student loan payments, get more insurance, etc. This may mean delaying your filing by about a month or 2, but it may save you a headache.

I did a run-through of Sch. J and found extra income that I wasn't spending since I was no longer paying out over half of my income to the credit cards. So, I ended my student loan forbearance. I still need to do another workout of the schedule, but hopefully, that extra planning will keep me in a chapter 7.

[okiemom2008]

1. The median/means test is what initially determines whether you are a ch. 7 or 13 case.

If your income is below your state's median for your family size, you can try for a ch. 7 without automatic presumption of abuse. If it is a little over, go through the complete means test, where you compare either what you pay for certain items or the irs standards for those items (food, clothing, etc.) to your income. If you fail that test as well, you will be kicked into ch. 13.

is their a website for the irs standards...and if i use less than the standards can i automatically change it to the irs standards. Also, on gas i put 300 and that is probably alot considering we only live 20 miles from work but we live 6 hours from one family and 12 from the other and so we go see them alot..have proof of that with gas receipts. Would this be ok?
2. Schedule j is where you lay out what you actually pay for certain items/utilities per month. This is then compared to your take-home income. If you have a significant amount of income left over, you may be forced into a chapter 13 repayment plan.

ok, so it is compared to take home not gross...that is great because we get like 30% taxes taken out.
how trustees define "significant" varies from court to court and by what you owe. You need to have the amount of leftover income as close to 0 as possible.

Since i am within 50 dollars i could just change incidentals to 60 a month instead of 10. Although we have no proof....??
My advice: First, work a sample means test. Then, do a trial run of schedule i (income) and sch. J. If you wind up with a chunk of income left over, take steps to use up that income--increase student loan payments, get more insurance, etc. This may mean delaying your filing by about a month or 2, but it may save you a headache.

I
i did a run-through of sch. J and found extra income that i wasn't spending since i was no longer paying out over half of my income to the credit cards. So, i ended my student loan forbearance. I still need to do another workout of the schedule, but hopefully, that extra planning will keep me in a chapter 7.

my student loan is in forebearance aslo but i included it in the SCH J. Since it is forebearance i cannot include it ? Our income is below the means if it matters. Thanks for the help!

I guess where I am getting confused is--since we are under the means test income---why does anything else matter?

And I cannot understand if they do or don't care abut debts discharging when they look at income to debt. We will have extra if all debts are discharged but if not we will not have any money and will be in the hole.

Like if we have 32k in credit card debt--So about 500.00 a month in minimum payments--do we include that when we are considering income to debt even though the whole point of filing bk is to get rid of it??

And our vehicle we are letting go back--payment is 560 a month--do we include that or not since we have been paying on it but won't be in the future???

LOL My questions are neverending

[Kingxray]

Good point Okiemom. I have been wondering that myself. Why do they include our current income but not our current dischargeable debts when figuring our means test? Good luck to you. I think we are screwed and going to be forced into a 13.

[okiemom2008]

Good point Okiemom. I have been wondering that myself. Why do they include our current income but not our current dischargeable debts when figuring our means test? Good luck to you. I think we are screwed and going to be forced into a 13.

I know, I feel like I am missing something....Why would they not include those debts since we have been paying on them for years? It doesn't make sense why they consider gross income and debts but not the one's you are discharging even though you may end up having to pay them back. So confused!

Good Luck to you too!

[keepmine]

Gross income is used because, they want to see the total financial picture. Further down the form, you account for withholding.
You can't use debts you wish to discharge as an expense because, once discharged you no longer have a legal oligation to pay them.
The purpose of bk reform was, to force more Chapter 13 filings. That's why you need to get your disposable income as low as possible. They may have raised the number but I think $187/month is the threshold for a trustee to consider the fact that you have enough disposable income to fund a Chapter 13 plan.
How much disposable income are you showing? Do you have an attorney?

[okiemom2008]

Gross income is used because, they want to see the total financial picture. Further down the form, you account for withholding.
You can't use debts you wish to discharge as an expense because, once discharged you no longer have a legal oligation to pay them.
The purpose of bk reform was, to force more Chapter 13 filings. That's why you need to get your disposable income as low as possible. They may have raised the number but I think $187/month is the threshold for a trustee to consider the fact that you have enough disposable income to fund a Chapter 13 plan.
How much disposable income are you showing? Do you have an attorney?

Yes I have an attorney but only retained. He gave me all the paperwork but I am so confused. On my Scehedule J page is says "post-bankruptcy" meaning after bankrptcy-Is this what it is supposed to say? So I will have disposable income of about 50.00.

[willowhare]

Some answers

1. Check on legalconsumer.com for a means test.
2. The address for the website that has the IRS standards is floating around this website. Unfortunately, I don't have it on the top of my head .
3. Since the sch. J is supposed to be a look at what you would be paying out after bankruptcy, it would make sense to add the student loan payment, even if it won't come out of forbearance until after the bkr closes. You should ask your attorney.
4. As for the car, I don't know.
5. If you can get the amount of leftover income down the $50, you're probably OK. Consult with the lawyer.

[Rebel]

The advice posted here for helping a debtor qualify for Chapter 7 is sound, but I sense a presumption in the general conversation that Chapter 7 is always the best way to go and Chapter 13 is a necessary evil a debtor might be forced into if they have too much disposable income (more than $187?) and should be avoided if at all possible. In my situation, our household income is well below the median income for our state, and when I plug in IRS figures for the means test, we end up with a very negative number for disposable income. But that only means there would be no presumption of abuse if we filed Chapter 7 and had reasonable Schedule J figures to calculate an appropriately low (or nonexistant) disposable income. However, we spend (much) less than the IRS standards, so when using schedules I &J with realistic numbers, we qualify for Chapter 13, IF we sell our seasonal cottage, which is in the works. I personally prefer Chapter 13, because there are assets we would prefer to keep, plus the process is less invasive and, I would imagine, much less distressing. It also looks better on the credit report. I also understand that a Chapter 7 BK trustee can continue to tap into your assets to pay creditors even after the official discharge, but not sure where I heard that. My schedule J says 'current expenditures', but I'm assuming (and I could be wrong) that your Schedule J budget would also be considered a 'postbankruptcy' budget because it does not include any of the debt payments you were making that will be discharged. Anyone filing BK should assess the pros and cons of both options, if both are available to utilize.

[daylate]

I'd suggest searching the forum for Schedule J lots of good info here. Bottom line as I understand it is that J is a forward looking (post bk) document that sees if you have any thing left to pay off creditors. With a bit of creative and thorough thinking most can get to a slightly negative disposable monthly income. Remember that the J is after bk so if you don't spend much on clothing, food, medical care, entertainment, gifts,etc now it doesn't mean you won't after bk so don't assume what you spend (or don't spend) now is what you will spend after. Find some of the threads where people have put their J's on the forum and people have analyzed/commented. Lots of good stuff. Good luck.
s

[momofthree]

Here is the link to IRS standards: http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

If you're giving back the car, you cannot use the payment on the schedule J because it's forward-looking. But, if you're under the median income, you probably won't have much disposable income if you use the IRS standard expenses. Many of us live way under the "standard" leading up to bk while trying to pay our bills. It's okay to actually spend money on clothes and steak. ;)

If you're under the median income, you shouldn't be in the 30% tax bracket, which means you get a large tax refund--especially if you have kids. The trustee will latch onto that. You need to adjust your withholding so that you break even at tax time and get more money in your monthly paycheck to live on. You'll need to make sure your schedule J takes that into account so that you don't get pushed into a ch.13 once the withholding is adjusted.

[tcreegan]

Hi all, Hi Rebel,

prefer Chapter 13, because there are assets we would prefer to keep ..this should always be the Ch 7 vs Ch 13 decision I too have noticed the almost religous aversion to a Ch 13, many times when it is obviously the best option.

, plus the process is less invasive and, I would imagine, much less distressing. ...might be, but getting the plan confirmed is often a real PITA most folks find pretty distressing, and actually a lot of the aversion to a Ch13 seems to be from the 3yr-5yr supervision by the trustee.

It also looks better on the credit report...ouch...pennywise, pound foolish...credit report hypotheticals should never be a part of the BK decision process, the difference in your credit score can be made up 50X more effectively w/ some simple credit rebuilding and report cleaning post BK.

The way I look at means-test vs schedule I&J is the means-test lets you in the door, and schedule I&J keeps you from getting kicked out.

And yeah, Rebel, you should see some of the heroics folks try to pull on these to stay in a Ch 7....

Tom in Colo