When the debtor’s projected income on Schedules I and J is a significant number, my first question is always: “how real are the Schedule J expenses”?
In districts where the difference between I and J retains some significance in Chapter 7, bankruptcy attorneys need to cast a critical eye on what the debtor says it costs them to live going forward. Even clients who have been paying their credit cards up til filing don’t generally find gobs of cash in their bank accounts post discharge. So, where to look to get the schedule aligned with reality?
Here’s my list of starting places:
- Food– can a family of this size really eat for the listed amount
- Housekeeping– have the debtors broken out cleaning supplies, lawn care, etc.
- Repair & replacement- is there provision to repair appliances and replace soft goods like linens
- Maintenance for homeowners– is there money for new roof, a plumber, paint
- Health care- what health needs and dental care have been postponed to repay creditors
- Vacations & celebrations does budget provide for birthdays, Christmas, and some vacation
- Transportation – does budget provide for repairs, maintenance, & tires as well as gas
- Non dischargeable claims – is there provision for debts surviving the bankruptcy
- Retirement- are debtors saving for retirement
- Current year taxes – is sufficient money provided to pay the current year taxes come April
- Cost of moving- those surrendering houses need to move and put up rental deposit
- Pet care – capture not just food, but grooming and veterinary care
The list of expenses on Schedule J is not exclusive. Consider what the client has slighted while struggling with debt and help them construct a budget that deals in a real world fashion with the cost of living after bankruptcy.
While not all of these expenses are immune from challenge in every venue, leaving significant money on the bottom line invites a challenge. Don’t ask for trouble; use up the money.