Why no credit card expense on Sch J?

[rkm]

Most advice I see says monthly credit card payments should not be listed on Sch J b/c those debts will be discharged in the BK. OK, if that's the rule, then fine. But I'm trying to understand the justification, since this advice seems to contradict the language on Schedule J, which says:
"CURRENT expenditures ... :
Complete this schedule by estimating the average or projected monthly expenses of the debtor ... at time case filed."

The form says "at time case filed" not "what you expect to be paying if your debts are discharged."

Can someone point to an actual law that says the form intends to mean the opposite of what it actually says?

Thanks

[scorpion35]

Most advice I see says monthly credit card payments should not be listed on Sch J b/c those debts will be discharged in the BK. OK, if that's the rule, then fine. But I'm trying to understand the justification, since this advice seems to contradict the language on Schedule J, which says:
"CURRENT expenditures ... :
Complete this schedule by estimating the average or projected monthly expenses of the debtor ... at time case filed."

The form says "at time case filed" not "what you expect to be paying if your debts are discharged."

Can someone point to an actual law that says the form intends to mean the opposite of what it actually says?

Thanks

theres nothing to understand.it is what it is

[rkm]

theres nothing to understand.it is what it is

ummm .... thanks, I guess ...

Anyone have a helpful response?

[debee]

Complete this schedule by estimating the average or projected monthly expenses of the debtor ... at time case filed."

The language may be a little confusing, but the purpose is the same everywhere: to see if you have any money left after paying your reasonable and necessary expenses to fund a chapter 13 bankruptcy and repay your creditors in full or part.

eta: also note the words "estimating" and "projected". Those words are not necessary if you use actual, present expenses. Those are words that apply when you are looking to expenses for which no record exists. A projection moves into the future. Hence, "forward looking".

[despritfreya]

"projected monthly expenses of the debtor ... at time case filed."

Actually this is quite simple and the key are the words "at time case filed". The moment the case is filed the debt is deemed discharged (no intent to reaffirm). As a result it is not a "projected monthly expense".

Des.

[rkm]

Thanks Debee

I believe "projected" expenses would apply to things like auto maintenance. I might spend $50 a month on gasoline, but I can list $200 a month in auto expenses because I'm projecting that the car will need a major tuneup and new tires in the next year.

Still, Schedule J is titled "current expenditures." So my question remains: if I'm currently paying $200 a month on my credit card for previous expenses, why would I not list that payment among my current expenses? It makes no sense.

Mostly, I'm wondering if anyone can cite to statutory or case law that supports the idea that credit card payments are excluded.

R

[rkm]

Thanks, Des,

But the debt is discharged when it is discharged by the trustee. That does not occur until several weeks after the filing.

I'm still wondering if anyone can cite to some authority that says credit card payments must be excluded from Schedule J.

R

[Peeps]

I'm still wondering if anyone can cite to some authority that says credit card payments must be excluded from Schedule J.

Why? Are you filing BK or just itchin' to know out of sheer curiosity? I only ask because it's a busy time of the year and doubt that anyone here is rushing out to their law libraries to look up case law for you. Sorry... But hey here's a thought! You could go ahead and file that paperwork, argue your case, attempt to set precedent and then a trustee could help you with the citations. Knock yourself out! Let us know how that goes for you. Ho Ho Ho and best of luck!!

[nc73]

What's not to understand here? You don't pay credit cards when you have filed. Therefore how is it an expense? At least most of us don't pay our credit cards when we've filed. That's just stupid. Nobody needs to cite anything because we've all had prior experience and your case will be dismissed if you include credit cards.

Thanks, Des,

But the debt is discharged when it is discharged by the trustee. That does not occur until several weeks after the filing.

I'm still wondering if anyone can cite to some authority that says credit card payments must be excluded from Schedule J.

R

[tcreegan]

Hi rkm,

11 usc 707(b)(2)(ii)
Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not include any payments for debts. In addition, the debtor's monthly expenses shall include the debtor's reasonably necessary expenses incurred to maintain the safety of the debtor and the family of the debtor

11 usc 1325(b)(2)
(2) For purposes of this subsection, the term "disposable income" means current monthly income received by the debtor (other than child support payments, foster care payments, or disability payments for a dependent child made in accordance with applicable nonbankruptcy law to the extent reasonably necessary to be expended for such child) less amounts reasonably necessary to be expended--

When you submit Schedule J, the trustee looks it over, if they see an 'unreasonable' expense they will subtract it and recalculate your DMI (disposable monthly income), if it pushes DMI over $187 they will file a motion to dismiss or convert to ch 13

You can bet they will object to payments on unsecured debt discharged in the BK

It makes no sense. ...welcome to the wonderful world of bankruptcy

Welcome aboard, keep asking questions, lots of folks here to help you out!

Tom in Colo

[rkm]

>> Knock yourself out! Let us know how that goes for you. Ho Ho Ho and best of luck!!

Gee, thanks for the attitude.

OK, so I'm a fairly new legal assistant and I'm seeing conflicting opinions. Since the schedule instructions say one thing, and the general advice says the opposite, I'm wondering ... out of curiosity ... why the general advice is justified. Is there really some basis for excluding a certain type of current expenditure from the overall list of current expenditures or do you just have to be inducted into the secret bankruptcy society to learn the truth?

If you're too busy to supply a mature answer, then go do something else. You don't have to get pissy ...

[rkm]

>>> Welcome aboard, keep asking questions, lots of folks here to help you out!

THANK YOU very much. Yes, I'm learning a lot.

Rick

[Peeps]

LOL, for the record, that was sarcasm, not attitude... there's a difference.

If you can't at least get a chuckle at the irony of a legal assistant turning to a BK Forum to get a bunch of strangers to research law citations, then I suppose the response might seem a bit pissy.

A bunch of people took time to offer insights & experience and just got blown off because they didn't offer citations. I won't apologize for feeling like good people were being taken advangage of. But I will offer an apology for firing off a post that could have been much more neutral. What reads as humor on my screen might not seem so funny on someone elses. I get it. Now, my read over here is that you might be just a teensey bit over-defensive, but I guess I won't make that my problem. Best of luck to you in your fledgling legal career.

[free2breathe]

...Since the schedule instructions say one thing, and the general advice says the opposite, I'm wondering ... out of curiosity ... why the general advice is justified. Is there really some basis for excluding a certain type of current expenditure from the overall list of current expenditures or do you just have to be inducted into the secret bankruptcy society to learn the truth?

Yes, actually. The purpose of schedule J is to determine what "necessary" expenses the petitioner expects to have in order to subtract it from the expected income of the petitioner to determine how much disposable monthly income the petitioner would have if all unsecured debts were discharged. If the petitioner listed the payments due monthly for the unsecured debts which they are hoping to have discharged, it would skew the overall picture. Unfortunately, the way schedule J's instructions are worded, it can be confusing, but I think the idea is to keep the purpose of filing bankruptcy in mind when filling out the schedules. What is it that filing bankruptcy is meant to accomplish and how do these forms help establish the need.

[debee]

I believe "projected" expenses would apply to things like auto maintenance. I might spend $50 a month on gasoline, but I can list $200 a month in auto expenses because I'm projecting that the car will need a major tuneup and new tires in the next year.

It's all projected & estimated, even your gas amount. Noone knows what gas prices will be in the month's ahead, or what food prices will do, or how many times you will need to see the doctor. Almost all future expenses are estimates and projections.

Still, Schedule J is titled "current expenditures."

I think you might be getting hung up on the word "current" because it's typed in a larger font than the word "projected" and perhaps you are forgetting that the words work together to give you a picture of how this form is to be filled out.

So my question remains: if I'm currently paying $200 a month on my credit card for previous expenses, why would I not list that payment among my current expenses?

I guess if you wanted to keep paying your credit card bills you could do that and then go ahead and factor them in as "current". Although technically speaking, they would not be "current" expenses but future expenses along with your car maintenance, groceries and every other item on schedule J.

Mostly, I'm wondering if anyone can cite to statutory or case law that supports the idea that credit card payments are excluded.

Schedule J instructions indicate that you are to complete the form by "estimating" & "projecting" your current expenses.

This is a quote from Justice Alito: “When terms used in a statute are undefined, we give them their ordinary meaning.” Asgrow Seed Co. v. Winterboer , 513 U. S. 179, 187 (1995) . While a projection takes past events into account, adjustments are often made based on other factors that may affect the final outcome. See In re Kibbe , 361 B. R. 302, 312, n. 9 (Bkrtcy. App. Panel CA1 2007)

This quote is from the Supreme Court's decision on Hamilton v. Lanning. In that case, the debtor was chapter 13 and schedule I/J and the whole disposable income thing was pretty thoroughly hashed out.

In the case of a chapter 7 bankruptcy filing in which the debtor seeks discharge of their credit card debts, they do not "project" them into their forward-looking budget because they have adjusted their budget projections to specifically exclude them. Hoping of course that they will not be in the future, but will be discharged and left in the past.

afterthought: "current monthly income" as defined by bk code (title 11, 101 10(A)) isn't "current at" all. It's income from the previous six months.

afterthought of the afterthought: I suppose you could go ahead and list your credit card payments on schedule J even though you hope the debt will be discharged so long as your DMI is low enough once you back it out. The downside of doing it though is you force the trustee to crunch your numbers and spend more time on your case than necessary. Why draw attention to yourself when you can do a cleaner job of it from the get-go and hopefully fly under the radar?