Schedule J in Bankruptcy: What is it Used For?

When you've come to the realization that bankruptcy is the right choice for you, you will have to accurately complete an extensive packet of different forms, or “schedules” in order to provide both the court and your creditors a clear picture of your true financial state. Bankruptcy cases Schedule J forms are one of these forms. Schedule J is used to show creditors the full scope of your monthly expenses, and is usually filled out in two different ways depending on whether you are filing Chapter 7 or Chapter 13 bankruptcy.  

Chapter 7  

Because of the nature of a Chapter 7 bankruptcy filing, schedule J must be filled out as thoroughly as possible, sometimes with the debtor listing even simple purchases to explain ongoing expenses.

• This is because a Chapter 7 filing is done with the intent to prove to the court that the monthly expenses of the debtor are completely overwhelming, compared to the limited sources of income that were listed in the debtor’s Schedule I. 
• It’s not uncommon for a creditor that is involved in a Chapter 7 to find cause for objection to the bankruptcy after discovering the debtor has listed items on the Schedule J that aren't actually long term expenses. If the debtor overstates his expenses, it is possible that he could possibly afford to file for a Chapter 13 bankruptcy and is just trying to make himself appear eligible for chapter 7. If a creditor catches this, his objection will usually be considered valid.  

Chapter 13 

A Chapter 13 filing is different than a chapter 7 filing. A Chapter 7 filing is filed with the intent to become absolved of all debt to creditors without having to enter payment agreements. A Chapter 13 bankruptcy is filed with the intent of agreeing to a payment installment plan with the court in order to eventually satisfy all of the debts that have been listed. Because of this, in a Chapter 13 bankruptcy filing the Schedule J is done in order to show that the debtor is, in fact, able to afford the prescribed monthly installment payments. This helps to assure creditors that they are more likely to recover the debt they are owed if they do not contest the Chapter 13 filing.  

Getting Help

No matter the type of filing a debtor decides to use, the Schedule J, along with every other piece of documentation required, must be filled out as accurately as possible to ensure that creditors don’t contest the filing. It is a good idea to hire a lawyer to help you with this process so you can ensure that there are no unnecessary problems or delays with your bankruptcy.